Correlation Between Alexandria Real and Mid America

Can any of the company-specific risk be diversified away by investing in both Alexandria Real and Mid America 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 Alexandria Real and Mid America into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alexandria Real Estate and Mid America Apartment Communities, you can compare the effects of market volatilities on Alexandria Real and Mid America 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 Alexandria Real with a short position of Mid America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alexandria Real and Mid America.

Diversification Opportunities for Alexandria Real and Mid America

-0.24

Correlation Coefficient

Alexandria Real  Mid America

Very good diversification

The 3 months correlation between Alexandria and Mid is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Alexandria Real Estate and Mid America Apartment Communit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid America Apartment and Alexandria 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 Alexandria Real Estate are associated (or correlated) with Mid America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid America Apartment has no effect on the direction of Alexandria Real i.e., Alexandria Real and Mid America go up and down completely randomly.

Pair Corralation between Alexandria Real and Mid America

Considering the 90-day investment horizon Alexandria Real Estate is expected to generate 1.52 times more return on investment than Mid America. However, Alexandria Real is 1.52 times more volatile than Mid America Apartment Communities. It trades about 0.08 of its potential returns per unit of risk. Mid America Apartment Communities is currently generating about -0.2 per unit of risk. If you would invest  7,028  in Alexandria Real Estate on May 6, 2025 and sell it today you would earn a total of  573.00  from holding Alexandria Real Estate or generate 8.15% return on investment over 90 days.

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

Alexandria Real Estate  vs.  Mid America Apartment Communit

Alexandria Real Estate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Alexandria Real Estate are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Alexandria Real may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Mid America Apartment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mid America Apartment Communities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Alexandria Real and Mid America

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

The idea behind Alexandria Real Estate and Mid America Apartment Communities 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..