Correlation Between Equity Lifestyle and Apartment Investment

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

Diversification Opportunities for Equity Lifestyle and Apartment Investment

0.55
  Correlation Coefficient

Very weak diversification

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

Pair Corralation between Equity Lifestyle and Apartment Investment

Considering the 90-day investment horizon Equity Lifestyle is expected to generate 4.17 times less return on investment than Apartment Investment. But when comparing it to its historical volatility, Equity Lifestyle Properties is 1.78 times less risky than Apartment Investment. It trades about 0.24 of its potential returns per unit of risk. Apartment Investment And is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest  586.00  in Apartment Investment And on May 15, 2022 and sell it today you would earn a total of  374.00  from holding Apartment Investment And or generate 63.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Equity Lifestyle Properties  vs.  Apartment Investment And

 Performance (%) 
       Timeline  
Equity Lifestyle Pro 
Equity Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Equity Lifestyle Properties are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain essential indicators, Equity Lifestyle may actually be approaching a critical reversion point that can send shares even higher in September 2022.

Equity Price Channel

Apartment Investment And 
Apartment Performance
28 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Apartment Investment And are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward indicators, Apartment Investment showed solid returns over the last few months and may actually be approaching a breakup point.

Apartment Price Channel

Equity Lifestyle and Apartment Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Equity Lifestyle and Apartment Investment

The main advantage of trading using opposite Equity Lifestyle and Apartment Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Lifestyle position performs unexpectedly, Apartment Investment 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 Apartment Investment will offset losses from the drop in Apartment Investment's long position.
The idea behind Equity Lifestyle Properties and Apartment Investment And 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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