Correlation Between Slate Office and Choice Properties

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

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

Diversification Opportunities for Slate Office and Choice Properties

0.55

Correlation Coefficient

Slate Office  Choice Properties

Very weak diversification

The 3 months correlation between Slate and Choice is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Slate Office REIT and Choice Properties Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Properties Real and Slate Office 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 Slate Office REIT are associated (or correlated) with Choice Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Properties Real has no effect on the direction of Slate Office i.e., Slate Office and Choice Properties go up and down completely randomly.

Pair Corralation between Slate Office and Choice Properties

Assuming the 90 days trading horizon Slate Office REIT is expected to under-perform the Choice Properties. In addition to that, Slate Office is 2.65 times more volatile than Choice Properties Real. It trades about -0.13 of its total potential returns per unit of risk. Choice Properties Real is currently generating about -0.01 per unit of volatility. If you would invest  1,360  in Choice Properties Real on February 8, 2024 and sell it today you would lose (45.00) from holding Choice Properties Real or give up 3.31% of portfolio value over 90 days.

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

Slate Office REIT  vs.  Choice Properties Real

Slate Office REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Slate Office REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Choice Properties Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Choice Properties Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Choice Properties is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Slate Office and Choice Properties

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

The idea behind Slate Office REIT and Choice Properties Real 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.