Correlation Between Site Centers and Plaza Retail

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

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

Diversification Opportunities for Site Centers and Plaza Retail

0.49

Correlation Coefficient

Site Centers  Plaza Retail

Very weak diversification

The 3 months correlation between Site and Plaza is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Site Centers Corp 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 Site Centers 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 Site Centers Corp 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 Site Centers i.e., Site Centers and Plaza Retail go up and down completely randomly.

Pair Corralation between Site Centers and Plaza Retail

Given the investment horizon of 90 days Site Centers is expected to generate 4.92 times less return on investment than Plaza Retail. But when comparing it to its historical volatility, Site Centers Corp is 1.25 times less risky than Plaza Retail. It trades about 0.02 of its potential returns per unit of risk. Plaza Retail REIT is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  258.00  in Plaza Retail REIT on February 22, 2024 and sell it today you would earn a total of  14.00  from holding Plaza Retail REIT or generate 5.43% return on investment over 90 days.

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

Site Centers Corp  vs.  Plaza Retail REIT

Site Centers Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Site Centers Corp are ranked lower than 1 (%) 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.

Plaza Retail REIT

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Plaza Retail REIT are ranked lower than 5 (%) 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 recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Site Centers and Plaza Retail

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

The idea behind Site Centers Corp and Plaza Retail REIT 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.