Correlation Between Wheeler Real and Acadia Realty

Can any of the company-specific risk be diversified away by investing in both Wheeler Real and Acadia 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 Wheeler Real and Acadia Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wheeler Real Estate and Acadia Realty Trust, you can compare the effects of market volatilities on Wheeler Real and Acadia 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 Wheeler Real with a short position of Acadia Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheeler Real and Acadia Realty.

Diversification Opportunities for Wheeler Real and Acadia Realty

0.78

Correlation Coefficient

Wheeler Real  Acadia Realty

Poor diversification

The 3 months correlation between Wheeler and Acadia is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Wheeler Real Estate and Acadia Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Realty Trust and Wheeler Real 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 Wheeler Real Estate are associated (or correlated) with Acadia Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Realty Trust has no effect on the direction of Wheeler Real i.e., Wheeler Real and Acadia Realty go up and down completely randomly.

Pair Corralation between Wheeler Real and Acadia Realty

Assuming the 90 days horizon Wheeler Real Estate is expected to generate 4.86 times more return on investment than Acadia Realty. However, Wheeler Real is 4.86 times more volatile than Acadia Realty Trust. It trades about 0.09 of its potential returns per unit of risk. Acadia Realty Trust is currently generating about 0.16 per unit of risk. If you would invest  103.00  in Wheeler Real Estate on September 5, 2024 and sell it today you would earn a total of  186.00  from holding Wheeler Real Estate or generate 180.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Wheeler Real Estate  vs.  Acadia Realty Trust

Wheeler Real Estate

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wheeler Real Estate are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Wheeler Real reported solid returns over the last few months and may actually be approaching a breakup point.

Acadia Realty Trust

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Acadia Realty Trust are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain forward-looking signals, Acadia Realty may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Wheeler Real and Acadia Realty

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

The idea behind Wheeler Real Estate and Acadia 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..