Correlation Between Acadia Realty and Saul Centers

Can any of the company-specific risk be diversified away by investing in both Acadia Realty and Saul 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 Acadia Realty and Saul Centers 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 Saul Centers, you can compare the effects of market volatilities on Acadia Realty and Saul 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 Acadia Realty with a short position of Saul Centers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acadia Realty and Saul Centers.

Diversification Opportunities for Acadia Realty and Saul Centers

0.48

Correlation Coefficient

Acadia Realty  Saul Centers

Very weak diversification

The 3 months correlation between Acadia and Saul is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Realty Trust and Saul Centers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saul Centers 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 Saul Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saul Centers has no effect on the direction of Acadia Realty i.e., Acadia Realty and Saul Centers go up and down completely randomly.

Pair Corralation between Acadia Realty and Saul Centers

Considering the 90-day investment horizon Acadia Realty Trust is expected to generate 1.54 times more return on investment than Saul Centers. However, Acadia Realty is 1.54 times more volatile than Saul Centers. It trades about 0.07 of its potential returns per unit of risk. Saul Centers is currently generating about -0.09 per unit of risk. If you would invest  1,628  in Acadia Realty Trust on January 19, 2024 and sell it today you would earn a total of  47.00  from holding Acadia Realty Trust or generate 2.89% return on investment over 90 days.

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

Acadia Realty Trust  vs.  Saul Centers

Acadia Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acadia Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Acadia Realty is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Saul Centers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Saul Centers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Acadia Realty and Saul Centers

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

The idea behind Acadia Realty Trust and Saul Centers 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.