Correlation Between British Land and W P
Can any of the company-specific risk be diversified away by investing in both British Land and W P 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 British Land and W P into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British Land and W P Carey, you can compare the effects of market volatilities on British Land and W P 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 British Land with a short position of W P. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Land and W P.
Diversification Opportunities for British Land and W P
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between British and WPC is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding British Land and W P Carey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W P Carey and British Land 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 British Land are associated (or correlated) with W P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W P Carey has no effect on the direction of British Land i.e., British Land and W P go up and down completely randomly.
Pair Corralation between British Land and W P
Assuming the 90 days horizon British Land is expected to generate 1.41 times more return on investment than W P. However, British Land is 1.41 times more volatile than W P Carey. It trades about 0.07 of its potential returns per unit of risk. W P Carey is currently generating about 0.04 per unit of risk. If you would invest 345.00 in British Land on August 25, 2024 and sell it today you would earn a total of 140.00 from holding British Land or generate 40.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
British Land vs. W P Carey
Performance |
| Timeline |
| British Land |
| W P Carey |
British Land and W P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British Land and W P
The main advantage of trading using opposite British Land and W P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British Land position performs unexpectedly, W P 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 W P will offset losses from the drop in W P's long position.| British Land vs. Global Net Lease, | British Land vs. VICI Properties | British Land vs. British Land | British Land vs. Highlands REIT |
| W P vs. STAG Industrial | W P vs. National Retail Properties | W P vs. Medical Properties Trust | W P vs. Omega Healthcare Investors |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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