Correlation Between EPR Properties and Power REIT
Can any of the company-specific risk be diversified away by investing in both EPR Properties and Power REIT 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 EPR Properties and Power REIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EPR Properties and Power REIT, you can compare the effects of market volatilities on EPR Properties and Power REIT 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 EPR Properties with a short position of Power REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPR Properties and Power REIT.
Diversification Opportunities for EPR Properties and Power REIT
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between EPR and Power is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding EPR Properties and Power REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power REIT and EPR Properties 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 EPR Properties are associated (or correlated) with Power REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power REIT has no effect on the direction of EPR Properties i.e., EPR Properties and Power REIT go up and down completely randomly.
Pair Corralation between EPR Properties and Power REIT
Assuming the 90 days trading horizon EPR Properties is expected to generate 40.33 times less return on investment than Power REIT. But when comparing it to its historical volatility, EPR Properties is 12.06 times less risky than Power REIT. It trades about 0.02 of its potential returns per unit of risk. Power REIT is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 67.00 in Power REIT on September 25, 2024 and sell it today you would earn a total of 57.00 from holding Power REIT or generate 85.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EPR Properties vs. Power REIT
Performance |
| Timeline |
| EPR Properties |
| Power REIT |
EPR Properties and Power REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EPR Properties and Power REIT
The main advantage of trading using opposite EPR Properties and Power REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPR Properties position performs unexpectedly, Power REIT 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 Power REIT will offset losses from the drop in Power REIT's long position.| EPR Properties vs. Digital Realty Trust | EPR Properties vs. Digital Realty Trust | EPR Properties vs. Gladstone Land Corp | EPR Properties vs. EPR Properties |
| Power REIT vs. Newlake Capital Partners | Power REIT vs. EPR Properties | Power REIT vs. Digital Realty Trust | Power REIT vs. EPR Properties |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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