Correlation Between Wheeler Real and Centerspace

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

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

Diversification Opportunities for Wheeler Real and Centerspace

-0.77

Correlation Coefficient

Wheeler Real  Centerspace

Pay attention - limited upside

The 3 months correlation between Wheeler and Centerspace is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Wheeler Real Estate and Centerspace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centerspace and Wheeler Real 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 Wheeler Real Estate are associated (or correlated) with Centerspace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centerspace has no effect on the direction of Wheeler Real i.e., Wheeler Real and Centerspace go up and down completely randomly.

Pair Corralation between Wheeler Real and Centerspace

Given the investment horizon of 90 days Wheeler Real Estate is expected to under-perform the Centerspace. But the stock apears to be less risky and, when comparing its historical volatility, Wheeler Real Estate is 3.7 times less risky than Centerspace. The stock trades about -0.07 of its potential returns per unit of risk. The Centerspace is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  5,508  in Centerspace on February 19, 2024 and sell it today you would earn a total of  1,454  from holding Centerspace or generate 26.4% return on investment over 90 days.

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

Wheeler Real Estate  vs.  Centerspace

Wheeler Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wheeler Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's essential indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Centerspace

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Centerspace are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Centerspace reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wheeler Real and Centerspace

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

The idea behind Wheeler Real Estate and Centerspace 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.