Correlation Between Getty Realty and Equity Commonwealth
Can any of the company-specific risk be diversified away by investing in both Getty Realty and Equity Commonwealth 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 Equity Commonwealth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Getty Realty and Equity Commonwealth, you can compare the effects of market volatilities on Getty Realty and Equity Commonwealth 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 Equity Commonwealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Getty Realty and Equity Commonwealth.
Diversification Opportunities for Getty Realty and Equity Commonwealth
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Getty and Equity is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Getty Realty and Equity Commonwealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Commonwealth 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 Equity Commonwealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Commonwealth has no effect on the direction of Getty Realty i.e., Getty Realty and Equity Commonwealth go up and down completely randomly.
Pair Corralation between Getty Realty and Equity Commonwealth
Considering the 90-day investment horizon Getty Realty is expected to generate 0.13 times more return on investment than Equity Commonwealth. However, Getty Realty is 7.64 times less risky than Equity Commonwealth. It trades about 0.02 of its potential returns per unit of risk. Equity Commonwealth is currently generating about -0.08 per unit of risk. If you would invest 3,074 in Getty Realty on December 5, 2024 and sell it today you would earn a total of 50.00 from holding Getty Realty or generate 1.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Getty Realty vs. Equity Commonwealth
Performance |
| Timeline |
| Getty Realty |
| Equity Commonwealth |
Getty Realty and Equity Commonwealth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Getty Realty and Equity Commonwealth
The main advantage of trading using opposite Getty Realty and Equity Commonwealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Getty Realty position performs unexpectedly, Equity Commonwealth 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 Equity Commonwealth will offset losses from the drop in Equity Commonwealth's long position.| Getty Realty vs. Regency Centers | ||
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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