Correlation Between Apartment Income and Equity Lifestyle

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

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

Diversification Opportunities for Apartment Income and Equity Lifestyle

0.0

Correlation Coefficient

Apartment Income  Equity Lifestyle

Pay attention - limited upside

The 3 months correlation between Apartment and Equity is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Apartment Income REIT and Equity Lifestyle Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Lifestyle Pro and Apartment Income 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 Apartment Income REIT are associated (or correlated) with Equity Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Lifestyle Pro has no effect on the direction of Apartment Income i.e., Apartment Income and Equity Lifestyle go up and down completely randomly.

Pair Corralation between Apartment Income and Equity Lifestyle

If you would invest (100.00) in Apartment Income REIT on February 10, 2025 and sell it today you would earn a total of  100.00  from holding Apartment Income REIT or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Apartment Income REIT  vs.  Equity Lifestyle Properties

Apartment Income REIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days Apartment Income REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Apartment Income is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Equity Lifestyle Pro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Equity Lifestyle Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Equity Lifestyle is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Apartment Income and Equity Lifestyle

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

The idea behind Apartment Income REIT and Equity Lifestyle Properties 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 CEOs Directory module to screen CEOs from public companies around the world.