Correlation Between Presidio Property and Stratus Properties

Can any of the company-specific risk be diversified away by investing in both Presidio Property and Stratus Properties 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 Presidio Property and Stratus Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Presidio Property Trust and Stratus Properties, you can compare the effects of market volatilities on Presidio Property and Stratus Properties 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 Presidio Property with a short position of Stratus Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Presidio Property and Stratus Properties.

Diversification Opportunities for Presidio Property and Stratus Properties

-0.6

Correlation Coefficient

Presidio Property  Stratus Properties

Excellent diversification

The 3 months correlation between Presidio and Stratus is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Presidio Property Trust and Stratus Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stratus Properties and Presidio 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 Presidio Property Trust are associated (or correlated) with Stratus Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stratus Properties has no effect on the direction of Presidio Property i.e., Presidio Property and Stratus Properties go up and down completely randomly.

Pair Corralation between Presidio Property and Stratus Properties

Given the investment horizon of 90 days Presidio Property Trust is expected to generate 2.38 times more return on investment than Stratus Properties. However, Presidio Property is 2.38 times more volatile than Stratus Properties. It trades about 0.02 of its potential returns per unit of risk. Stratus Properties is currently generating about 0.01 per unit of risk. If you would invest  79.00  in Presidio Property Trust on March 16, 2024 and sell it today you would earn a total of  0.00  from holding Presidio Property Trust or generate 0.0% return on investment over 90 days.

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

Presidio Property Trust  vs.  Stratus Properties

Presidio Property Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Presidio Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Stratus Properties

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stratus Properties are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Stratus Properties unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Presidio Property and Stratus Properties

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

The idea behind Presidio Property Trust and Stratus Properties 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.