Correlation Between Retail Opportunity and Site Centers

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

By analyzing existing cross correlation between Retail Opportunity Investments and Site Centers Corp, you can compare the effects of market volatilities on Retail Opportunity and Site 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 Retail Opportunity with a short position of Site Centers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Opportunity and Site Centers.

Diversification Opportunities for Retail Opportunity and Site Centers

0.28

Correlation Coefficient

Retail Opportunity  Site Centers

Modest diversification

The 3 months correlation between Retail and Site is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Retail Opportunity Investments and Site Centers Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Site Centers Corp and Retail Opportunity 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 Retail Opportunity Investments are associated (or correlated) with Site Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Site Centers Corp has no effect on the direction of Retail Opportunity i.e., Retail Opportunity and Site Centers go up and down completely randomly.

Pair Corralation between Retail Opportunity and Site Centers

Given the investment horizon of 90 days Retail Opportunity is expected to generate 9.55 times less return on investment than Site Centers. In addition to that, Retail Opportunity is 1.16 times more volatile than Site Centers Corp. It trades about 0.02 of its total potential returns per unit of risk. Site Centers Corp is currently generating about 0.25 per unit of volatility. If you would invest  1,373  in Site Centers Corp on March 2, 2024 and sell it today you would earn a total of  69.00  from holding Site Centers Corp or generate 5.03% return on investment over 90 days.

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

Retail Opportunity Investments  vs.  Site Centers Corp

Retail Opportunity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Retail Opportunity Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Retail Opportunity is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Site Centers Corp

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Site Centers Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Site Centers is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Retail Opportunity and Site Centers

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

The idea behind Retail Opportunity Investments and Site Centers Corp 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.