Correlation Between Tapestry and Slate Office

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

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

Diversification Opportunities for Tapestry and Slate Office

0.41

Correlation Coefficient

Tapestry  Slate Office

Very weak diversification

The 3 months correlation between Tapestry and Slate is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Tapestry and Slate Office REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Slate Office REIT and Tapestry 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 Tapestry are associated (or correlated) with Slate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Slate Office REIT has no effect on the direction of Tapestry i.e., Tapestry and Slate Office go up and down completely randomly.

Pair Corralation between Tapestry and Slate Office

Considering the 90-day investment horizon Tapestry is expected to generate 0.29 times more return on investment than Slate Office. However, Tapestry is 3.49 times less risky than Slate Office. It trades about 0.08 of its potential returns per unit of risk. Slate Office REIT is currently generating about -0.03 per unit of risk. If you would invest  3,824  in Tapestry on February 13, 2025 and sell it today you would earn a total of  4,502  from holding Tapestry or generate 117.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	48.38%
Values	Daily Returns

Tapestry  vs.  Slate Office REIT

Tapestry

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tapestry has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Tapestry is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Slate Office REIT

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Slate Office REIT are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Slate Office is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Tapestry and Slate Office

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

The idea behind Tapestry and Slate Office REIT 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 Global Correlations module to find global opportunities by holding instruments from different markets.