Correlation Between Plaza Retail and True North

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

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

Diversification Opportunities for Plaza Retail and True North

0.31

Correlation Coefficient

Plaza Retail  True North

Weak diversification

The 3 months correlation between Plaza and True is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Plaza Retail REIT and True North Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on True North Commercial and Plaza Retail 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 Plaza Retail REIT are associated (or correlated) with True North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of True North Commercial has no effect on the direction of Plaza Retail i.e., Plaza Retail and True North go up and down completely randomly.

Pair Corralation between Plaza Retail and True North

Assuming the 90 days trading horizon Plaza Retail REIT is expected to generate 0.46 times more return on investment than True North. However, Plaza Retail REIT is 2.2 times less risky than True North. It trades about 0.19 of its potential returns per unit of risk. True North Commercial is currently generating about 0.03 per unit of risk. If you would invest  369.00  in Plaza Retail REIT on April 22, 2025 and sell it today you would earn a total of  27.00  from holding Plaza Retail REIT or generate 7.32% return on investment over 90 days.

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

Plaza Retail REIT  vs.  True North Commercial

Plaza Retail REIT

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Plaza Retail REIT are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Plaza Retail may actually be approaching a critical reversion point that can send shares even higher in August 2025.

True North Commercial

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in True North Commercial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, True North is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Plaza Retail and True North

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

The idea behind Plaza Retail REIT and True North Commercial 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.