Correlation Between Firm Capital and Phillips Edison
Can any of the company-specific risk be diversified away by investing in both Firm Capital and Phillips Edison 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 Firm Capital and Phillips Edison into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Firm Capital Property and Phillips Edison Co, you can compare the effects of market volatilities on Firm Capital and Phillips Edison 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 Firm Capital with a short position of Phillips Edison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firm Capital and Phillips Edison.
Diversification Opportunities for Firm Capital and Phillips Edison
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Firm and Phillips is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Firm Capital Property and Phillips Edison Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phillips Edison and Firm Capital 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 Firm Capital Property are associated (or correlated) with Phillips Edison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phillips Edison has no effect on the direction of Firm Capital i.e., Firm Capital and Phillips Edison go up and down completely randomly.
Pair Corralation between Firm Capital and Phillips Edison
Assuming the 90 days horizon Firm Capital Property is expected to generate 48.68 times more return on investment than Phillips Edison. However, Firm Capital is 48.68 times more volatile than Phillips Edison Co. It trades about 0.07 of its potential returns per unit of risk. Phillips Edison Co is currently generating about 0.07 per unit of risk. If you would invest 329.00 in Firm Capital Property on August 25, 2024 and sell it today you would earn a total of 99.00 from holding Firm Capital Property or generate 30.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Firm Capital Property vs. Phillips Edison Co
Performance |
| Timeline |
| Firm Capital Property |
| Phillips Edison |
Firm Capital and Phillips Edison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Firm Capital and Phillips Edison
The main advantage of trading using opposite Firm Capital and Phillips Edison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firm Capital position performs unexpectedly, Phillips Edison 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 Phillips Edison will offset losses from the drop in Phillips Edison's long position.| Firm Capital vs. British Land | Firm Capital vs. Global Net Lease, | Firm Capital vs. VICI Properties | Firm Capital vs. British Land |
| Phillips Edison vs. Site Centers Corp | Phillips Edison vs. Retail Opportunity Investments | Phillips Edison vs. Urban Edge Properties | Phillips Edison vs. Netstreit Corp |
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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