Correlation Between Power REIT and Newlake Capital
Can any of the company-specific risk be diversified away by investing in both Power REIT and Newlake Capital 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 Newlake Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power REIT and Newlake Capital Partners, you can compare the effects of market volatilities on Power REIT and Newlake Capital 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 Newlake Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power REIT and Newlake Capital.
Diversification Opportunities for Power REIT and Newlake Capital
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Power and Newlake is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Power REIT and Newlake Capital Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newlake Capital Partners 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 Newlake Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newlake Capital Partners has no effect on the direction of Power REIT i.e., Power REIT and Newlake Capital go up and down completely randomly.
Pair Corralation between Power REIT and Newlake Capital
Allowing for the 90-day total investment horizon Power REIT is expected to generate 5.51 times more return on investment than Newlake Capital. However, Power REIT is 5.51 times more volatile than Newlake Capital Partners. It trades about 0.01 of its potential returns per unit of risk. Newlake Capital Partners is currently generating about 0.02 per unit of risk. If you would invest 524.00 in Power REIT on October 24, 2024 and sell it today you would lose (402.00) from holding Power REIT or give up 76.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Power REIT vs. Newlake Capital Partners
Performance |
| Timeline |
| Power REIT |
| Newlake Capital Partners |
Power REIT and Newlake Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power REIT and Newlake Capital
The main advantage of trading using opposite Power REIT and Newlake Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power REIT position performs unexpectedly, Newlake Capital 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 Newlake Capital will offset losses from the drop in Newlake Capital's long position.| Power REIT vs. Newlake Capital Partners | Power REIT vs. Outfront Media | Power REIT vs. Uniti Group | Power REIT vs. Farmland Partners |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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