Correlation Between Realty Income and Retail Estates
Can any of the company-specific risk be diversified away by investing in both Realty Income and Retail Estates 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 Realty Income and Retail Estates into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Realty Income and Retail Estates NV, you can compare the effects of market volatilities on Realty Income and Retail Estates 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 Realty Income with a short position of Retail Estates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and Retail Estates.
Diversification Opportunities for Realty Income and Retail Estates
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Realty and Retail is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income and Retail Estates NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retail Estates NV and Realty Income 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 Realty Income are associated (or correlated) with Retail Estates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retail Estates NV has no effect on the direction of Realty Income i.e., Realty Income and Retail Estates go up and down completely randomly.
Pair Corralation between Realty Income and Retail Estates
Assuming the 90 days horizon Realty Income is expected to generate 0.81 times more return on investment than Retail Estates. However, Realty Income is 1.23 times less risky than Retail Estates. It trades about 0.27 of its potential returns per unit of risk. Retail Estates NV is currently generating about -0.07 per unit of risk. If you would invest 5,057 in Realty Income on October 23, 2024 and sell it today you would earn a total of 226.00 from holding Realty Income or generate 4.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.12% |
| Values | Daily Returns |
Realty Income vs. Retail Estates NV
Performance |
| Timeline |
| Realty Income |
| Retail Estates NV |
Realty Income and Retail Estates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Realty Income and Retail Estates
The main advantage of trading using opposite Realty Income and Retail Estates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realty Income position performs unexpectedly, Retail Estates 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 Retail Estates will offset losses from the drop in Retail Estates' long position.| Realty Income vs. VELA TECHNOLPLC LS 0001 | Realty Income vs. Bio Techne Corp | Realty Income vs. AIR PRODCHEMICALS | Realty Income vs. TIANDE CHEMICAL |
| Retail Estates vs. Simon Property Group | Retail Estates vs. Realty Income | Retail Estates vs. Link Real Estate | Retail Estates vs. Range Resources Corp |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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