Correlation Between COPT Defense and Postal Realty

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

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

Diversification Opportunities for COPT Defense and Postal Realty

0.93

Correlation Coefficient

COPT Defense  Postal Realty

Almost no diversification

The 3 months correlation between COPT and Postal is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding COPT Defense Properties and Postal Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Realty Trust and COPT Defense 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 COPT Defense Properties are associated (or correlated) with Postal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Realty Trust has no effect on the direction of COPT Defense i.e., COPT Defense and Postal Realty go up and down completely randomly.

Pair Corralation between COPT Defense and Postal Realty

Considering the 90-day investment horizon COPT Defense is expected to generate 2.72 times less return on investment than Postal Realty. But when comparing it to its historical volatility, COPT Defense Properties is 1.28 times less risky than Postal Realty. It trades about 0.09 of its potential returns per unit of risk. Postal Realty Trust is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,257  in Postal Realty Trust on May 10, 2025 and sell it today you would earn a total of  204.00  from holding Postal Realty Trust or generate 16.23% return on investment over 90 days.

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

COPT Defense Properties  vs.  Postal Realty Trust

COPT Defense Properties

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in COPT Defense Properties are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, COPT Defense is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Postal Realty Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Postal Realty Trust are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Postal Realty disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COPT Defense and Postal Realty

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

The idea behind COPT Defense Properties and Postal 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.

Check out your portfolio center.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.