Correlation Between Cedar Realty and Valvoline
Can any of the company-specific risk be diversified away by investing in both Cedar Realty and Valvoline 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 Cedar Realty and Valvoline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cedar Realty Trust and Valvoline, you can compare the effects of market volatilities on Cedar Realty and Valvoline 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 Cedar Realty with a short position of Valvoline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cedar Realty and Valvoline.
Diversification Opportunities for Cedar Realty and Valvoline
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cedar and Valvoline is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Cedar Realty Trust and Valvoline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valvoline and Cedar Realty 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 Cedar Realty Trust are associated (or correlated) with Valvoline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valvoline has no effect on the direction of Cedar Realty i.e., Cedar Realty and Valvoline go up and down completely randomly.
Pair Corralation between Cedar Realty and Valvoline
Assuming the 90 days trading horizon Cedar Realty Trust is expected to generate 1.82 times more return on investment than Valvoline. However, Cedar Realty is 1.82 times more volatile than Valvoline. It trades about 0.03 of its potential returns per unit of risk. Valvoline is currently generating about 0.04 per unit of risk. If you would invest 1,345 in Cedar Realty Trust on January 29, 2024 and sell it today you would earn a total of 215.00 from holding Cedar Realty Trust or generate 15.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Cedar Realty Trust vs. Valvoline
Performance |
Timeline |
Cedar Realty Trust |
Valvoline |
Cedar Realty and Valvoline Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cedar Realty and Valvoline
The main advantage of trading using opposite Cedar Realty and Valvoline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cedar Realty position performs unexpectedly, Valvoline 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 Valvoline will offset losses from the drop in Valvoline's long position.Cedar Realty vs. Saul Centers | Cedar Realty vs. Wheeler Real Estate | Cedar Realty vs. Macerich Company | Cedar Realty vs. Simon Property Group |
Valvoline vs. Cosan SA ADR | Valvoline vs. Delek Energy | Valvoline vs. Crossamerica Partners LP | Valvoline vs. Par Pacific Holdings |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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