Correlation Between Realty Income and Farmland Partners
Can any of the company-specific risk be diversified away by investing in both Realty Income and Farmland Partners 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 Farmland Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Realty Income and Farmland Partners, you can compare the effects of market volatilities on Realty Income and Farmland Partners 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 Farmland Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and Farmland Partners.
Diversification Opportunities for Realty Income and Farmland Partners
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Realty and Farmland is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income and Farmland Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmland Partners 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 Farmland Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmland Partners has no effect on the direction of Realty Income i.e., Realty Income and Farmland Partners go up and down completely randomly.
Pair Corralation between Realty Income and Farmland Partners
Taking into account the 90-day investment horizon Realty Income is expected to under-perform the Farmland Partners. But the stock apears to be less risky and, when comparing its historical volatility, Realty Income is 1.44 times less risky than Farmland Partners. The stock trades about -0.35 of its potential returns per unit of risk. The Farmland Partners is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,117 in Farmland Partners on August 24, 2024 and sell it today you would earn a total of 118.00 from holding Farmland Partners or generate 10.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Realty Income vs. Farmland Partners
Performance |
| Timeline |
| Realty Income |
| Farmland Partners |
Realty Income and Farmland Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Realty Income and Farmland Partners
The main advantage of trading using opposite Realty Income and Farmland Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realty Income position performs unexpectedly, Farmland Partners 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 Farmland Partners will offset losses from the drop in Farmland Partners' long position.| Realty Income vs. Federal Realty Investment | Realty Income vs. Agree Realty | Realty Income vs. National Retail Properties | Realty Income vs. Tanger Factory Outlet |
| Farmland Partners vs. PotlatchDeltic Corp | Farmland Partners vs. Weyerhaeuser | Farmland Partners vs. Outfront Media | Farmland Partners vs. Gaming Leisure Properties |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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