Correlation Between Link Real and Simon Property

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Can any of the company-specific risk be diversified away by investing in both Link Real and Simon Property 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 Link Real and Simon Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Link Real Estate and Simon Property Group, you can compare the effects of market volatilities on Link Real and Simon Property 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 Link Real with a short position of Simon Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Link Real and Simon Property.

Diversification Opportunities for Link Real and Simon Property

-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Link and Simon is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Link Real Estate and Simon Property Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simon Property Group and Link Real 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 Link Real Estate are associated (or correlated) with Simon Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simon Property Group has no effect on the direction of Link Real i.e., Link Real and Simon Property go up and down completely randomly.

Pair Corralation between Link Real and Simon Property

Assuming the 90 days horizon Link Real Estate is expected to under-perform the Simon Property. In addition to that, Link Real is 2.12 times more volatile than Simon Property Group. It trades about -0.2 of its total potential returns per unit of risk. Simon Property Group is currently generating about 0.17 per unit of volatility. If you would invest  14,778  in Simon Property Group on December 29, 2023 and sell it today you would earn a total of  655.00  from holding Simon Property Group or generate 4.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy95.65%
ValuesDaily Returns

Link Real Estate  vs.  Simon Property Group

 Performance 
       Timeline  
Link Real Estate 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Link Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in April 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Simon Property Group 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Simon Property Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Simon Property may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Link Real and Simon Property Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Link Real and Simon Property

The main advantage of trading using opposite Link Real and Simon Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Link Real position performs unexpectedly, Simon Property 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 Simon Property will offset losses from the drop in Simon Property's long position.
The idea behind Link Real Estate and Simon Property Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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