Correlation Between WFD Unibail and Regency Centers

Can any of the company-specific risk be diversified away by investing in both WFD Unibail and Regency Centers 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 WFD Unibail and Regency Centers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WFD Unibail Rodamco and Regency Centers, you can compare the effects of market volatilities on WFD Unibail and Regency Centers 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 WFD Unibail with a short position of Regency Centers. Check out your portfolio center. Please also check ongoing floating volatility patterns of WFD Unibail and Regency Centers.

Diversification Opportunities for WFD Unibail and Regency Centers

-0.59

Correlation Coefficient

WFD Unibail  Regency Centers

Excellent diversification

The 3 months correlation between WFD and Regency is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding WFD Unibail Rodamco and Regency Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regency Centers and WFD Unibail 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 WFD Unibail Rodamco are associated (or correlated) with Regency Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regency Centers has no effect on the direction of WFD Unibail i.e., WFD Unibail and Regency Centers go up and down completely randomly.

Pair Corralation between WFD Unibail and Regency Centers

Assuming the 90 days horizon WFD Unibail Rodamco is expected to generate 2.15 times more return on investment than Regency Centers. However, WFD Unibail is 2.15 times more volatile than Regency Centers. It trades about 0.02 of its potential returns per unit of risk. Regency Centers is currently generating about 0.01 per unit of risk. If you would invest  7,950  in WFD Unibail Rodamco on September 9, 2024 and sell it today you would earn a total of  91.00  from holding WFD Unibail Rodamco or generate 1.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

WFD Unibail Rodamco  vs.  Regency Centers

WFD Unibail Rodamco

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WFD Unibail Rodamco are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, WFD Unibail is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Regency Centers

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Regency Centers are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Regency Centers is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with WFD Unibail and Regency Centers

The main advantage of trading using opposite WFD Unibail and Regency Centers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WFD Unibail position performs unexpectedly, Regency Centers 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 Regency Centers will offset losses from the drop in Regency Centers' long position.

The idea behind WFD Unibail Rodamco and Regency Centers 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.