Correlation Between Simon Property and Inventrust Properties

Can any of the company-specific risk be diversified away by investing in both Simon Property and Inventrust Properties 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 Inventrust Properties 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 Inventrust Properties Corp, you can compare the effects of market volatilities on Simon Property and Inventrust Properties 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 Inventrust Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and Inventrust Properties.

Diversification Opportunities for Simon Property and Inventrust Properties

0.77

Correlation Coefficient

Simon Property  Inventrust Properties

Poor diversification

The 3 months correlation between Simon and Inventrust is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and Inventrust Properties Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inventrust Properties 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 Inventrust Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inventrust Properties has no effect on the direction of Simon Property i.e., Simon Property and Inventrust Properties go up and down completely randomly.

Pair Corralation between Simon Property and Inventrust Properties

Considering the 90-day investment horizon Simon Property is expected to generate 1.37 times less return on investment than Inventrust Properties. In addition to that, Simon Property is 1.06 times more volatile than Inventrust Properties Corp. It trades about 0.19 of its total potential returns per unit of risk. Inventrust Properties Corp is currently generating about 0.27 per unit of volatility. If you would invest  2,898  in Inventrust Properties Corp on August 12, 2024 and sell it today you would earn a total of  196.00  from holding Inventrust Properties Corp or generate 6.76% return on investment over 90 days.

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

Simon Property Group  vs.  Inventrust Properties Corp

Simon Property Group

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Simon Property Group are ranked lower than 19 (%) 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.

Inventrust Properties

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Inventrust Properties Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Inventrust Properties may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Simon Property and Inventrust Properties

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

The idea behind Simon Property Group and Inventrust Properties Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.