Correlation Between Realty Income and Columbia Real
Can any of the company-specific risk be diversified away by investing in both Realty Income and Columbia Real 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 Columbia Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Realty Income and Columbia Real Estate, you can compare the effects of market volatilities on Realty Income and Columbia Real 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 Columbia Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and Columbia Real.
Diversification Opportunities for Realty Income and Columbia Real
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Realty and Columbia is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income and Columbia Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Real Estate 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 Columbia Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Real Estate has no effect on the direction of Realty Income i.e., Realty Income and Columbia Real go up and down completely randomly.
Pair Corralation between Realty Income and Columbia Real
Taking into account the 90-day investment horizon Realty Income is expected to under-perform the Columbia Real. In addition to that, Realty Income is 1.17 times more volatile than Columbia Real Estate. It trades about -0.24 of its total potential returns per unit of risk. Columbia Real Estate is currently generating about 0.05 per unit of volatility. If you would invest 1,140 in Columbia Real Estate on August 26, 2024 and sell it today you would earn a total of 12.00 from holding Columbia Real Estate or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Realty Income vs. Columbia Real Estate
Performance |
| Timeline |
| Realty Income |
| Columbia Real Estate |
Realty Income and Columbia Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Realty Income and Columbia Real
The main advantage of trading using opposite Realty Income and Columbia Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realty Income position performs unexpectedly, Columbia Real 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 Columbia Real will offset losses from the drop in Columbia Real's long position.The idea behind Realty Income and Columbia Real Estate 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.| Columbia Real vs. Realty Income | Columbia Real vs. Dynex Capital | Columbia Real vs. First Industrial Realty | Columbia Real vs. Healthcare Realty Trust |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |