Correlation Between Postal Realty and Alexanders

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

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

Diversification Opportunities for Postal Realty and Alexanders

0.72

Correlation Coefficient

Postal Realty  Alexanders

Poor diversification

The 3 months correlation between Postal and Alexanders is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Postal Realty Trust and Alexanders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexanders and Postal Realty 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 Postal Realty Trust are associated (or correlated) with Alexanders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexanders has no effect on the direction of Postal Realty i.e., Postal Realty and Alexanders go up and down completely randomly.

Pair Corralation between Postal Realty and Alexanders

Given the investment horizon of 90 days Postal Realty is expected to generate 7.25 times less return on investment than Alexanders. But when comparing it to its historical volatility, Postal Realty Trust is 1.34 times less risky than Alexanders. It trades about 0.01 of its potential returns per unit of risk. Alexanders is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  14,836  in Alexanders on January 23, 2025 and sell it today you would earn a total of  5,662  from holding Alexanders or generate 38.16% return on investment over 90 days.

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

Postal Realty Trust  vs.  Alexanders

Postal Realty Trust

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Postal Realty Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Postal Realty may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Alexanders

Risk-Adjusted Performance

Modest

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

Pair Trading with Postal Realty and Alexanders

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

The idea behind Postal Realty Trust and Alexanders 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.