Correlation Between Simon Property and Cedar Realty

Can any of the company-specific risk be diversified away by investing in both Simon Property and Cedar Realty 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 Cedar Realty 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 Cedar Realty Trust, you can compare the effects of market volatilities on Simon Property and Cedar Realty 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 Cedar Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and Cedar Realty.

Diversification Opportunities for Simon Property and Cedar Realty

0.24

Correlation Coefficient

Simon Property  Cedar Realty

Modest diversification

The 3 months correlation between Simon and Cedar is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Cedar Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cedar Realty Trust 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 Cedar Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cedar Realty Trust has no effect on the direction of Simon Property i.e., Simon Property and Cedar Realty go up and down completely randomly.

Pair Corralation between Simon Property and Cedar Realty

Assuming the 90 days trading horizon Simon Property Group is expected to generate 0.55 times more return on investment than Cedar Realty. However, Simon Property Group is 1.82 times less risky than Cedar Realty. It trades about -0.05 of its potential returns per unit of risk. Cedar Realty Trust is currently generating about -0.04 per unit of risk. If you would invest  6,185  in Simon Property Group on March 5, 2024 and sell it today you would lose (363.00) from holding Simon Property Group or give up 5.87% of portfolio value over 90 days.

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

Simon Property Group  vs.  Cedar Realty Trust

Simon Property Group

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Simon Property Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady technical and fundamental indicators, Simon Property is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Cedar Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cedar Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Preferred Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Simon Property and Cedar Realty

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

The idea behind Simon Property Group and Cedar Realty Trust 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 Global Correlations module to find global opportunities by holding instruments from different markets.