Can any of the company-specific risk be diversified away by investing in both El Puerto and Plaza Retail 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 El Puerto and Plaza Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between El Puerto de and Plaza Retail REIT, you can compare the effects of market volatilities on El Puerto and Plaza Retail 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 El Puerto with a short position of Plaza Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of El Puerto and Plaza Retail.
Diversification Opportunities for El Puerto and Plaza Retail
The 3 months correlation between ELPQF and Plaza is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding El Puerto de and Plaza Retail REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plaza Retail REIT and El Puerto 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 El Puerto de are associated (or correlated) with Plaza Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plaza Retail REIT has no effect on the direction of El Puerto i.e., El Puerto and Plaza Retail go up and down completely randomly.
Pair Corralation between El Puerto and Plaza Retail
Assuming the 90 days horizon El Puerto de is expected to under-perform the Plaza Retail. In addition to that, El Puerto is 1.66 times more volatile than Plaza Retail REIT. It trades about -0.38 of its total potential returns per unit of risk. Plaza Retail REIT is currently generating about 0.22 per unit of volatility. If you would invest 255.00 in Plaza Retail REIT on March 6, 2024 and sell it today you would earn a total of 17.00 from holding Plaza Retail REIT or generate 6.67% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in El Puerto de are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, El Puerto is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.
Compared to the overall equity markets, risk-adjusted returns on investments in Plaza Retail REIT are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Plaza Retail is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.