Correlation Between Simon Property and Realty Income
Can any of the company-specific risk be diversified away by investing in both Simon Property and Realty Income 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 Simon Property and Realty Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simon Property Group and Realty Income Corp, you can compare the effects of market volatilities on Simon Property and Realty Income 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 Simon Property with a short position of Realty Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and Realty Income.
Diversification Opportunities for Simon Property and Realty Income
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Simon and Realty is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Realty Income Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realty me Corp and Simon Property 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 Simon Property Group are associated (or correlated) with Realty Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realty me Corp has no effect on the direction of Simon Property i.e., Simon Property and Realty Income go up and down completely randomly.
Pair Corralation between Simon Property and Realty Income
Considering the 90-day investment horizon Simon Property Group is expected to under-perform the Realty Income. But the stock apears to be less risky and, when comparing its historical volatility, Simon Property Group is 1.03 times less risky than Realty Income. The stock trades about -0.2 of its potential returns per unit of risk. The Realty Income Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,192 in Realty Income Corp on January 24, 2024 and sell it today you would earn a total of 141.00 from holding Realty Income Corp or generate 2.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simon Property Group vs. Realty Income Corp
Performance |
| Timeline |
| Simon Property Group |
| Realty me Corp |
Simon Property and Realty Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simon Property and Realty Income
The main advantage of trading using opposite Simon Property and Realty Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property position performs unexpectedly, Realty Income 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 Realty Income will offset losses from the drop in Realty Income's long position.| Simon Property vs. Federal Realty Investment | Simon Property vs. Agree Realty | Simon Property vs. National Retail Properties | Simon Property vs. Kimco Realty |
| Realty Income vs. Federal Realty Investment | Realty Income vs. Macerich Company | Realty Income vs. National Retail Properties | Realty Income vs. Kimco Realty |
Check out your portfolio center.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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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