Correlation Between National Retail and W P
Can any of the company-specific risk be diversified away by investing in both National Retail and W P 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 National Retail and W P into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Retail Properties and W P Carey, you can compare the effects of market volatilities on National Retail and W P 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 National Retail with a short position of W P. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and W P.
Diversification Opportunities for National Retail and W P
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and WPC is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and W P Carey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W P Carey and National Retail 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 National Retail Properties are associated (or correlated) with W P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W P Carey has no effect on the direction of National Retail i.e., National Retail and W P go up and down completely randomly.
Pair Corralation between National Retail and W P
Considering the 90-day investment horizon National Retail Properties is expected to under-perform the W P. In addition to that, National Retail is 1.64 times more volatile than W P Carey. It trades about -0.15 of its total potential returns per unit of risk. W P Carey is currently generating about -0.03 per unit of volatility. If you would invest 5,748 in W P Carey on August 27, 2024 and sell it today you would lose (38.00) from holding W P Carey or give up 0.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Retail Properties vs. W P Carey
Performance |
| Timeline |
| National Retail Prop |
| W P Carey |
National Retail and W P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Retail and W P
The main advantage of trading using opposite National Retail and W P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail position performs unexpectedly, W P 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 W P will offset losses from the drop in W P's long position.| National Retail vs. Acadia Realty Trust | National Retail vs. Federal Realty Investment | National Retail vs. Realty Income | National Retail vs. Whitestone REIT |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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