Correlation Between Power REIT and Agree Realty
Can any of the company-specific risk be diversified away by investing in both Power REIT 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 Power REIT and Agree Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power REIT and Agree Realty, you can compare the effects of market volatilities on Power REIT 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 Power REIT with a short position of Agree Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power REIT and Agree Realty.
Diversification Opportunities for Power REIT and Agree Realty
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Power and Agree is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Power REIT and Agree Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agree Realty 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 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 Power REIT i.e., Power REIT and Agree Realty go up and down completely randomly.
Pair Corralation between Power REIT and Agree Realty
Allowing for the 90-day total investment horizon Power REIT is expected to generate 16.45 times more return on investment than Agree Realty. However, Power REIT is 16.45 times more volatile than Agree Realty. It trades about 0.11 of its potential returns per unit of risk. Agree Realty is currently generating about 0.08 per unit of risk. If you would invest 75.00 in Power REIT on August 30, 2024 and sell it today you would earn a total of 39.00 from holding Power REIT or generate 52.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power REIT vs. Agree Realty
Performance |
| Timeline |
| Power REIT |
| Agree Realty |
Power REIT and Agree Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power REIT and Agree Realty
The main advantage of trading using opposite Power REIT and Agree Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power REIT 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.| Power REIT vs. Newlake Capital Partners | Power REIT vs. Outfront Media | Power REIT vs. Uniti Group | Power REIT vs. Farmland Partners |
| Agree Realty vs. CBL Associates Properties | Agree Realty vs. Cedar Realty Trust | Agree Realty vs. Simon Property Group | Agree Realty vs. Realty Income |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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