Correlation Between Power REIT and Modiv
Can any of the company-specific risk be diversified away by investing in both Power REIT and Modiv 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 Modiv into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power REIT and Modiv Inc, you can compare the effects of market volatilities on Power REIT and Modiv 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 Modiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power REIT and Modiv.
Diversification Opportunities for Power REIT and Modiv
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Power and Modiv is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Power REIT and Modiv Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modiv Inc 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 Modiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modiv Inc has no effect on the direction of Power REIT i.e., Power REIT and Modiv go up and down completely randomly.
Pair Corralation between Power REIT and Modiv
Allowing for the 90-day total investment horizon Power REIT is expected to generate 1.1 times less return on investment than Modiv. In addition to that, Power REIT is 3.86 times more volatile than Modiv Inc. It trades about 0.01 of its total potential returns per unit of risk. Modiv Inc is currently generating about 0.05 per unit of volatility. If you would invest 1,051 in Modiv Inc on August 27, 2024 and sell it today you would earn a total of 590.00 from holding Modiv Inc or generate 56.14% 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. Modiv Inc
Performance |
| Timeline |
| Power REIT |
| Modiv Inc |
Power REIT and Modiv Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power REIT and Modiv
The main advantage of trading using opposite Power REIT and Modiv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power REIT position performs unexpectedly, Modiv 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 Modiv will offset losses from the drop in Modiv's long position.| Power REIT vs. Broadstone Net Lease | Power REIT vs. Armada Hflr Pr | Power REIT vs. Brightspire Capital | Power REIT vs. Safehold |
| Modiv vs. Investcorp Credit Management | Modiv vs. Medalist Diversified Reit | Modiv vs. Aquagold International | Modiv vs. Morningstar Unconstrained Allocation |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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