Correlation Between Safehold and Power REIT
Can any of the company-specific risk be diversified away by investing in both Safehold and Power REIT 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 Power REIT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safehold and Power REIT, you can compare the effects of market volatilities on Safehold and Power REIT 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 Power REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safehold and Power REIT.
Diversification Opportunities for Safehold and Power REIT
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Safehold and Power is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Safehold and Power REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power REIT 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 Power REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power REIT has no effect on the direction of Safehold i.e., Safehold and Power REIT go up and down completely randomly.
Pair Corralation between Safehold and Power REIT
Given the investment horizon of 90 days Safehold is expected to under-perform the Power REIT. But the stock apears to be less risky and, when comparing its historical volatility, Safehold is 7.71 times less risky than Power REIT. The stock trades about -0.12 of its potential returns per unit of risk. The Power REIT is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 125.00 in Power REIT on August 30, 2024 and sell it today you would lose (11.00) from holding Power REIT or give up 8.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Safehold vs. Power REIT
Performance |
| Timeline |
| Safehold |
| Power REIT |
Safehold and Power REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safehold and Power REIT
The main advantage of trading using opposite Safehold and Power REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safehold position performs unexpectedly, Power REIT 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 Power REIT will offset losses from the drop in Power REIT's long position.| Safehold vs. Essential Properties Realty | Safehold vs. Broadstone Net Lease | Safehold vs. Armada Hflr Pr | Safehold vs. CTO Realty Growth |
| Power REIT vs. Newlake Capital Partners | Power REIT vs. Outfront Media | Power REIT vs. Uniti Group | Power REIT vs. Farmland Partners |
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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