Correlation Between SIR Royalty and Chartwell Retirement

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

By analyzing existing cross correlation between SIR Royalty Income and Chartwell Retirement Residences, you can compare the effects of market volatilities on SIR Royalty and Chartwell Retirement 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 SIR Royalty with a short position of Chartwell Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIR Royalty and Chartwell Retirement.

Diversification Opportunities for SIR Royalty and Chartwell Retirement

0.32

Correlation Coefficient

SIR Royalty  Chartwell Retirement

Weak diversification

The 3 months correlation between SIR and Chartwell is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding SIR Royalty Income and Chartwell Retirement Residence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chartwell Retirement and SIR Royalty 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 SIR Royalty Income are associated (or correlated) with Chartwell Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chartwell Retirement has no effect on the direction of SIR Royalty i.e., SIR Royalty and Chartwell Retirement go up and down completely randomly.

Pair Corralation between SIR Royalty and Chartwell Retirement

Assuming the 90 days trading horizon SIR Royalty is expected to generate 2.93 times less return on investment than Chartwell Retirement. But when comparing it to its historical volatility, SIR Royalty Income is 1.33 times less risky than Chartwell Retirement. It trades about 0.1 of its potential returns per unit of risk. Chartwell Retirement Residences is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,760  in Chartwell Retirement Residences on August 1, 2025 and sell it today you would earn a total of  279.00  from holding Chartwell Retirement Residences or generate 15.85% return on investment over 90 days.

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

SIR Royalty Income  vs.  Chartwell Retirement Residence

SIR Royalty Income

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in SIR Royalty Income are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SIR Royalty is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Chartwell Retirement

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chartwell Retirement Residences are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, Chartwell Retirement sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SIR Royalty and Chartwell Retirement

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

The idea behind SIR Royalty Income and Chartwell Retirement Residences 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.