Correlation Between Power REIT and EPR Properties
Can any of the company-specific risk be diversified away by investing in both Power REIT and EPR Properties 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 Power REIT and EPR Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power REIT PFD and EPR Properties Series, you can compare the effects of market volatilities on Power REIT and EPR Properties 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 Power REIT with a short position of EPR Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power REIT and EPR Properties.
Diversification Opportunities for Power REIT and EPR Properties
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Power and EPR is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Power REIT PFD and EPR Properties Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPR Properties Series and Power REIT 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 Power REIT PFD are associated (or correlated) with EPR Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPR Properties Series has no effect on the direction of Power REIT i.e., Power REIT and EPR Properties go up and down completely randomly.
Pair Corralation between Power REIT and EPR Properties
Assuming the 90 days horizon Power REIT PFD is expected to generate 10.72 times more return on investment than EPR Properties. However, Power REIT is 10.72 times more volatile than EPR Properties Series. It trades about 0.05 of its potential returns per unit of risk. EPR Properties Series is currently generating about 0.1 per unit of risk. If you would invest 340.00 in Power REIT PFD on September 1, 2024 and sell it today you would earn a total of 10.00 from holding Power REIT PFD or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 75.4% |
| Values | Daily Returns |
Power REIT PFD vs. EPR Properties Series
Performance |
| Timeline |
| Power REIT PFD |
| EPR Properties Series |
Power REIT and EPR Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power REIT and EPR Properties
The main advantage of trading using opposite Power REIT and EPR Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power REIT position performs unexpectedly, EPR Properties 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 EPR Properties will offset losses from the drop in EPR Properties' long position.The idea behind Power REIT PFD and EPR Properties Series 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.| EPR Properties vs. EPR Properties | EPR Properties vs. EPR Properties | EPR Properties vs. Lexington Realty Trust | EPR Properties vs. RLJ Lodging 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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