Correlation Between Global Net and Safehold
Can any of the company-specific risk be diversified away by investing in both Global Net and Safehold 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 Global Net and Safehold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Net Lease and Safehold, you can compare the effects of market volatilities on Global Net and Safehold 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 Global Net with a short position of Safehold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Safehold.
Diversification Opportunities for Global Net and Safehold
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Safehold is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Safehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safehold and Global 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 Global Net Lease are associated (or correlated) with Safehold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safehold has no effect on the direction of Global Net i.e., Global Net and Safehold go up and down completely randomly.
Pair Corralation between Global Net and Safehold
Assuming the 90 days trading horizon Global Net Lease is expected to generate 0.65 times more return on investment than Safehold. However, Global Net Lease is 1.55 times less risky than Safehold. It trades about -0.02 of its potential returns per unit of risk. Safehold is currently generating about -0.1 per unit of risk. If you would invest 2,235 in Global Net Lease on August 30, 2024 and sell it today you would lose (20.00) from holding Global Net Lease or give up 0.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Global Net Lease vs. Safehold
Performance |
| Timeline |
| Global Net Lease |
| Safehold |
Global Net and Safehold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Net and Safehold
The main advantage of trading using opposite Global Net and Safehold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net position performs unexpectedly, Safehold 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 Safehold will offset losses from the drop in Safehold's long position.| Global Net vs. Global Net Lease | Global Net vs. Global Medical REIT | Global Net vs. City Office REIT | Global Net vs. ARMOUR Residential REIT |
| Safehold vs. Essential Properties Realty | Safehold vs. Broadstone Net Lease | Safehold vs. Armada Hflr Pr | Safehold vs. CTO Realty Growth |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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