Correlation Between Getty Realty and Acadia Realty
Can any of the company-specific risk be diversified away by investing in both Getty Realty and Acadia Realty 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 Getty Realty and Acadia Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Getty Realty and Acadia Realty Trust, you can compare the effects of market volatilities on Getty Realty and Acadia Realty 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 Getty Realty with a short position of Acadia Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Getty Realty and Acadia Realty.
Diversification Opportunities for Getty Realty and Acadia Realty
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Getty and Acadia is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Getty Realty and Acadia Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Realty Trust and Getty Realty 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 Getty Realty are associated (or correlated) with Acadia Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Realty Trust has no effect on the direction of Getty Realty i.e., Getty Realty and Acadia Realty go up and down completely randomly.
Pair Corralation between Getty Realty and Acadia Realty
Considering the 90-day investment horizon Getty Realty is expected to generate 3.02 times less return on investment than Acadia Realty. But when comparing it to its historical volatility, Getty Realty is 1.27 times less risky than Acadia Realty. It trades about 0.08 of its potential returns per unit of risk. Acadia Realty Trust is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,236 in Acadia Realty Trust on August 26, 2024 and sell it today you would earn a total of 286.00 from holding Acadia Realty Trust or generate 12.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Getty Realty vs. Acadia Realty Trust
Performance |
| Timeline |
| Getty Realty |
| Acadia Realty Trust |
Getty Realty and Acadia Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Getty Realty and Acadia Realty
The main advantage of trading using opposite Getty Realty and Acadia Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Getty Realty position performs unexpectedly, Acadia Realty 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 Acadia Realty will offset losses from the drop in Acadia Realty's long position.The idea behind Getty Realty and Acadia Realty Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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