Correlation Between Broadstone Net and Essential Properties
Can any of the company-specific risk be diversified away by investing in both Broadstone Net and Essential Properties 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 Broadstone Net and Essential Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broadstone Net Lease and Essential Properties Realty, you can compare the effects of market volatilities on Broadstone Net and Essential Properties 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 Broadstone Net with a short position of Essential Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadstone Net and Essential Properties.
Diversification Opportunities for Broadstone Net and Essential Properties
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Broadstone and Essential is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Broadstone Net Lease and Essential Properties Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essential Properties and Broadstone Net 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 Broadstone Net Lease are associated (or correlated) with Essential Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essential Properties has no effect on the direction of Broadstone Net i.e., Broadstone Net and Essential Properties go up and down completely randomly.
Pair Corralation between Broadstone Net and Essential Properties
Considering the 90-day investment horizon Broadstone Net is expected to generate 2.49 times less return on investment than Essential Properties. In addition to that, Broadstone Net is 1.08 times more volatile than Essential Properties Realty. It trades about 0.03 of its total potential returns per unit of risk. Essential Properties Realty is currently generating about 0.08 per unit of volatility. If you would invest 2,109 in Essential Properties Realty on August 27, 2024 and sell it today you would earn a total of 1,238 from holding Essential Properties Realty or generate 58.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Broadstone Net Lease vs. Essential Properties Realty
Performance |
| Timeline |
| Broadstone Net Lease |
| Essential Properties |
Broadstone Net and Essential Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Broadstone Net and Essential Properties
The main advantage of trading using opposite Broadstone Net and Essential Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadstone Net position performs unexpectedly, Essential Properties 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 Essential Properties will offset losses from the drop in Essential Properties' long position.| Broadstone Net vs. Armada Hflr Pr | Broadstone Net vs. Brightspire Capital | Broadstone Net vs. Safehold | Broadstone Net vs. Essential Properties Realty |
| Essential Properties vs. Armada Hflr Pr | Essential Properties vs. CTO Realty Growth | Essential Properties vs. Brightspire Capital | Essential Properties vs. Broadstone Net Lease |
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 the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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