Strategies · Library · Real estate
§16.3.2Hedges and structures
Economic diversification
A variant of §16.3 Intra-asset diversification within real estate
Diversify property by regions grouped by their main industry, jobs and income levels. It can reduce non-market risk and costs.
- Asset class
- Real estate
- Held for
- Years
- Data
- Needs data ARCANE lacks
- Symphony
- Cannot be built as a symphony
The rule
- Signal
- Economic profile of each region
- Entry and exit
- Buy and hold
- Sizing
- Equal or optimised weights by region type
How it fails
- Regional data lacking
- Illiquid
- Regions correlate in downturns
Data it needs
- regional property and economic data
No regional property data.
How ARCANE uses it
Alpha could mention it when explaining regional property risk. Paper only.
Needs regional property series.
Source: Kakushadze and Serur (2018), 151 Trading Strategies, §16.3.2, p. 112 of the SSRN version. Described in our words. Hedges and structures is ARCANE’s filing, not the book’s.