Correlation Between Simon Property and Four Corners

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

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

Diversification Opportunities for Simon Property and Four Corners

0.59

Correlation Coefficient

Simon Property  Four Corners

Very weak diversification

The 3 months correlation between Simon and Four is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Four Corners Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Four Corners Property and Simon 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 Simon Property Group are associated (or correlated) with Four Corners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Four Corners Property has no effect on the direction of Simon Property i.e., Simon Property and Four Corners go up and down completely randomly.

Pair Corralation between Simon Property and Four Corners

Considering the 90-day investment horizon Simon Property Group is expected to generate 1.05 times more return on investment than Four Corners. However, Simon Property is 1.05 times more volatile than Four Corners Property. It trades about 0.19 of its potential returns per unit of risk. Four Corners Property is currently generating about -0.11 per unit of risk. If you would invest  16,193  in Simon Property Group on August 10, 2024 and sell it today you would earn a total of  1,382  from holding Simon Property Group or generate 8.53% return on investment over 90 days.

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

Simon Property Group  vs.  Four Corners Property

Simon Property Group

Risk-Adjusted Performance

18 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simon Property Group are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Simon Property reported solid returns over the last few months and may actually be approaching a breakup point.

Four Corners Property

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Four Corners Property are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Four Corners is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Simon Property and Four Corners

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

The idea behind Simon Property Group and Four Corners Property 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.