Correlation Between Power REIT and Realty Income
Can any of the company-specific risk be diversified away by investing in both Power REIT and Realty Income 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 Realty Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power REIT and Realty Income, you can compare the effects of market volatilities on Power REIT and Realty Income 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 Realty Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power REIT and Realty Income.
Diversification Opportunities for Power REIT and Realty Income
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Power and Realty is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Power REIT and Realty Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realty Income 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 Realty Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realty Income has no effect on the direction of Power REIT i.e., Power REIT and Realty Income go up and down completely randomly.
Pair Corralation between Power REIT and Realty Income
Allowing for the 90-day total investment horizon Power REIT is expected to generate 3.38 times more return on investment than Realty Income. However, Power REIT is 3.38 times more volatile than Realty Income. It trades about 0.0 of its potential returns per unit of risk. Realty Income is currently generating about -0.32 per unit of risk. If you would invest 109.00 in Power REIT on August 25, 2024 and sell it today you would lose (2.00) from holding Power REIT or give up 1.83% 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. Realty Income
Performance |
| Timeline |
| Power REIT |
| Realty Income |
Power REIT and Realty Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Power REIT and Realty Income
The main advantage of trading using opposite Power REIT and Realty Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power REIT position performs unexpectedly, Realty Income 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 Realty Income will offset losses from the drop in Realty Income's long position.| Power REIT vs. Newlake Capital Partners | Power REIT vs. Outfront Media | Power REIT vs. Uniti Group | Power REIT vs. Farmland Partners |
| Realty Income vs. Federal Realty Investment | Realty Income vs. Macerich Company | Realty Income vs. National Retail Properties | Realty Income vs. Kimco Realty |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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