Correlation Between American Assets and Equity Lifestyle

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Can any of the company-specific risk be diversified away by investing in both American Assets 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 American Assets and Equity Lifestyle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Assets Trust and Equity Lifestyle Properties, you can compare the effects of market volatilities on American Assets 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 American Assets with a short position of Equity Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Assets and Equity Lifestyle.

Diversification Opportunities for American Assets and Equity Lifestyle

0.81
  Correlation Coefficient

Very poor diversification

The 3 months correlation between American and Equity is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding American Assets Trust 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 American Assets 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 American Assets Trust 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 American Assets i.e., American Assets and Equity Lifestyle go up and down completely randomly.

Pair Corralation between American Assets and Equity Lifestyle

Considering the 90-day investment horizon American Assets Trust is expected to under-perform the Equity Lifestyle. In addition to that, American Assets is 1.06 times more volatile than Equity Lifestyle Properties. It trades about -0.07 of its total potential returns per unit of risk. Equity Lifestyle Properties is currently generating about -0.05 per unit of volatility. If you would invest  8,226  in Equity Lifestyle Properties on July 3, 2022 and sell it today you would lose (1,942)  from holding Equity Lifestyle Properties or give up 23.61% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

American Assets Trust  vs.  Equity Lifestyle Properties

 Performance (%) 
       Timeline  
American Assets Trust 
American Performance
0 of 100
Over the last 90 days American Assets Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in November 2022. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

American Price Channel

Equity Lifestyle Pro 
Equity Performance
0 of 100
Over the last 90 days Equity Lifestyle Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in November 2022. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Equity Price Channel

American Assets and Equity Lifestyle Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with American Assets and Equity Lifestyle

The main advantage of trading using opposite American Assets and Equity Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Assets 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.
American Assets vs. WP Carey Co
The idea behind American Assets Trust 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.
Equity Lifestyle vs. Amazon Inc
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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