Correlation Between BBB Foods and Cedar Realty

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Can any of the company-specific risk be diversified away by investing in both BBB Foods and Cedar Realty at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BBB Foods and Cedar Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBB Foods and Cedar Realty Trust, you can compare the effects of market volatilities on BBB Foods and Cedar Realty and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BBB Foods with a short position of Cedar Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBB Foods and Cedar Realty.

Diversification Opportunities for BBB Foods and Cedar Realty

-0.22
  Correlation Coefficient

Very good diversification

The 3 months correlation between BBB and Cedar is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and Cedar Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cedar Realty Trust and BBB Foods is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BBB Foods are associated (or correlated) with Cedar Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cedar Realty Trust has no effect on the direction of BBB Foods i.e., BBB Foods and Cedar Realty go up and down completely randomly.

Pair Corralation between BBB Foods and Cedar Realty

Given the investment horizon of 90 days BBB Foods is expected to generate 11.93 times less return on investment than Cedar Realty. In addition to that, BBB Foods is 1.14 times more volatile than Cedar Realty Trust. It trades about 0.01 of its total potential returns per unit of risk. Cedar Realty Trust is currently generating about 0.12 per unit of volatility. If you would invest  1,412  in Cedar Realty Trust on September 18, 2024 and sell it today you would earn a total of  260.00  from holding Cedar Realty Trust or generate 18.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

BBB Foods  vs.  Cedar Realty Trust

 Performance 
       Timeline  
BBB Foods 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BBB Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, BBB Foods is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
Cedar Realty Trust 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Cedar Realty Trust are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cedar Realty sustained solid returns over the last few months and may actually be approaching a breakup point.

BBB Foods and Cedar Realty Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BBB Foods and Cedar Realty

The main advantage of trading using opposite BBB Foods and Cedar Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBB Foods position performs unexpectedly, Cedar Realty can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cedar Realty will offset losses from the drop in Cedar Realty's long position.
The idea behind BBB Foods and Cedar Realty Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
Check out your portfolio center.
Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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