Correlation Between Acadia Realty and EMPLOYERS HLDGS

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Can any of the company-specific risk be diversified away by investing in both Acadia Realty and EMPLOYERS HLDGS 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 Acadia Realty and EMPLOYERS HLDGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Acadia Realty Trust and EMPLOYERS HLDGS DL, you can compare the effects of market volatilities on Acadia Realty and EMPLOYERS HLDGS 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 Acadia Realty with a short position of EMPLOYERS HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acadia Realty and EMPLOYERS HLDGS.

Diversification Opportunities for Acadia Realty and EMPLOYERS HLDGS

0.92
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Acadia and EMPLOYERS is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Realty Trust and EMPLOYERS HLDGS DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMPLOYERS HLDGS DL and Acadia Realty 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 Acadia Realty Trust are associated (or correlated) with EMPLOYERS HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMPLOYERS HLDGS DL has no effect on the direction of Acadia Realty i.e., Acadia Realty and EMPLOYERS HLDGS go up and down completely randomly.

Pair Corralation between Acadia Realty and EMPLOYERS HLDGS

Assuming the 90 days horizon Acadia Realty is expected to generate 1.26 times less return on investment than EMPLOYERS HLDGS. But when comparing it to its historical volatility, Acadia Realty Trust is 1.42 times less risky than EMPLOYERS HLDGS. It trades about 0.16 of its potential returns per unit of risk. EMPLOYERS HLDGS DL is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4,195  in EMPLOYERS HLDGS DL on September 23, 2024 and sell it today you would earn a total of  665.00  from holding EMPLOYERS HLDGS DL or generate 15.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Acadia Realty Trust  vs.  EMPLOYERS HLDGS DL

 Performance 
       Timeline  
Acadia Realty Trust 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Acadia Realty Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Acadia Realty may actually be approaching a critical reversion point that can send shares even higher in January 2025.
EMPLOYERS HLDGS DL 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in EMPLOYERS HLDGS DL are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, EMPLOYERS HLDGS reported solid returns over the last few months and may actually be approaching a breakup point.

Acadia Realty and EMPLOYERS HLDGS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Acadia Realty and EMPLOYERS HLDGS

The main advantage of trading using opposite Acadia Realty and EMPLOYERS HLDGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acadia Realty position performs unexpectedly, EMPLOYERS HLDGS 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 EMPLOYERS HLDGS will offset losses from the drop in EMPLOYERS HLDGS's long position.
The idea behind Acadia Realty Trust and EMPLOYERS HLDGS DL 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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