Correlation Between Safehold and Essential Properties
Can any of the company-specific risk be diversified away by investing in both Safehold and Essential Properties 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 Safehold and Essential Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safehold and Essential Properties Realty, you can compare the effects of market volatilities on Safehold and Essential Properties 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 Safehold with a short position of Essential Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safehold and Essential Properties.
Diversification Opportunities for Safehold and Essential Properties
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Safehold and Essential is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Safehold and Essential Properties Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essential Properties and Safehold 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 Safehold are associated (or correlated) with Essential Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essential Properties has no effect on the direction of Safehold i.e., Safehold and Essential Properties go up and down completely randomly.
Pair Corralation between Safehold and Essential Properties
Given the investment horizon of 90 days Safehold is expected to under-perform the Essential Properties. In addition to that, Safehold is 1.62 times more volatile than Essential Properties Realty. It trades about -0.25 of its total potential returns per unit of risk. Essential Properties Realty is currently generating about 0.14 per unit of volatility. If you would invest 3,083 in Essential Properties Realty on November 2, 2024 and sell it today you would earn a total of 137.00 from holding Essential Properties Realty or generate 4.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Safehold vs. Essential Properties Realty
Performance |
| Timeline |
| Safehold |
| Essential Properties |
Safehold and Essential Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safehold and Essential Properties
The main advantage of trading using opposite Safehold and Essential Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safehold position performs unexpectedly, Essential Properties 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 Essential Properties will offset losses from the drop in Essential Properties' long position.| Safehold vs. Essential Properties Realty | Safehold vs. Broadstone Net Lease | Safehold vs. Armada Hflr Pr | Safehold vs. CTO Realty Growth |
| Essential Properties vs. Armada Hflr Pr | Essential Properties vs. CTO Realty Growth | Essential Properties vs. Brightspire Capital | Essential Properties vs. Broadstone Net Lease |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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