Correlation Between Realty Income and Agree Realty

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Can any of the company-specific risk be diversified away by investing in both Realty Income and Agree 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 Realty Income and Agree Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Realty Income and Agree Realty, you can compare the effects of market volatilities on Realty Income and Agree 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 Realty Income with a short position of Agree Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and Agree Realty.

Diversification Opportunities for Realty Income and Agree Realty

RealtyAgreeDiversified AwayRealtyAgreeDiversified Away100%
0.42
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Realty and Agree is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income and Agree Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agree Realty and Realty Income 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 Realty Income are associated (or correlated) with Agree Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agree Realty has no effect on the direction of Realty Income i.e., Realty Income and Agree Realty go up and down completely randomly.

Pair Corralation between Realty Income and Agree Realty

Taking into account the 90-day investment horizon Realty Income is expected to generate 1.42 times more return on investment than Agree Realty. However, Realty Income is 1.42 times more volatile than Agree Realty. It trades about 0.04 of its potential returns per unit of risk. Agree Realty is currently generating about -0.21 per unit of risk. If you would invest  5,573  in Realty Income on November 27, 2024 and sell it today you would earn a total of  40.00  from holding Realty Income or generate 0.72% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Realty Income  vs.  Agree Realty

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -10-50
JavaScript chart by amCharts 3.21.15O ADC-PA
       Timeline  
Realty Income 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Realty Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Realty Income is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb52535455565758
Agree Realty 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Agree Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Preferred Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1717.51818.51919.5

Realty Income and Agree Realty Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.6-2.7-1.79-0.890.01510.911.832.763.68 0.050.100.150.200.250.300.35
JavaScript chart by amCharts 3.21.15O ADC-PA
       Returns  

Pair Trading with Realty Income and Agree Realty

The main advantage of trading using opposite Realty Income and Agree Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realty Income position performs unexpectedly, Agree 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 Agree Realty will offset losses from the drop in Agree Realty's long position.
The idea behind Realty Income and Agree Realty 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.
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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