Correlation Between Saul Centers and Acadia Realty

Can any of the company-specific risk be diversified away by investing in both Saul Centers and Acadia 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 Saul Centers and Acadia Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Saul Centers and Acadia Realty

-0.75

Correlation Coefficient

Saul Centers  Acadia Realty

Pay attention - limited upside

The 3 months correlation between Saul and Acadia is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Saul Centers and Acadia Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Realty Trust and Saul Centers 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 Saul Centers are associated (or correlated) with Acadia Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Realty Trust has no effect on the direction of Saul Centers i.e., Saul Centers and Acadia Realty go up and down completely randomly.

Pair Corralation between Saul Centers and Acadia Realty

Assuming the 90 days trading horizon Saul Centers is expected to generate 0.9 times more return on investment than Acadia Realty. However, Saul Centers is 1.11 times less risky than Acadia Realty. It trades about 0.01 of its potential returns per unit of risk. Acadia Realty Trust is currently generating about 0.01 per unit of risk. If you would invest  2,025  in Saul Centers on February 8, 2024 and sell it today you would earn a total of  87.00  from holding Saul Centers or generate 4.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Saul Centers  vs.  Acadia Realty Trust

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 rather sound basic indicators, Saul Centers is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Acadia Realty Trust

Risk-Adjusted Performance

0 of 100

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 newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Saul Centers and Acadia Realty

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

The idea behind Saul Centers and Acadia 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.