Correlation Between Acadia Realty and GEA GROUP

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

By analyzing existing cross correlation between Acadia Realty Trust and GEA GROUP, you can compare the effects of market volatilities on Acadia Realty and GEA GROUP 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 Acadia Realty with a short position of GEA GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acadia Realty and GEA GROUP.

Diversification Opportunities for Acadia Realty and GEA GROUP

0.64

Correlation Coefficient

Acadia Realty  GEA GROUP

Poor diversification

The 3 months correlation between Acadia and GEA is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Realty Trust and GEA GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEA GROUP and Acadia Realty 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 Acadia Realty Trust are associated (or correlated) with GEA GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEA GROUP has no effect on the direction of Acadia Realty i.e., Acadia Realty and GEA GROUP go up and down completely randomly.

Pair Corralation between Acadia Realty and GEA GROUP

Assuming the 90 days horizon Acadia Realty Trust is expected to generate 1.14 times more return on investment than GEA GROUP. However, Acadia Realty is 1.14 times more volatile than GEA GROUP. It trades about 0.21 of its potential returns per unit of risk. GEA GROUP is currently generating about 0.15 per unit of risk. If you would invest  1,655  in Acadia Realty Trust on September 29, 2024 and sell it today you would earn a total of  645.00  from holding Acadia Realty Trust or generate 38.97% return on investment over 90 days.

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

Acadia Realty Trust  vs.  GEA GROUP

Acadia Realty Trust

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Acadia Realty Trust are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Acadia Realty may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GEA GROUP

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in GEA GROUP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, GEA GROUP may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Acadia Realty and GEA GROUP

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

The idea behind Acadia Realty Trust and GEA GROUP 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 CEOs Directory module to screen CEOs from public companies around the world.