Correlation Between Vanguard Reit and Realty Income
Can any of the company-specific risk be diversified away by investing in both Vanguard 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 Vanguard 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 Vanguard Reit Index and Realty Income, you can compare the effects of market volatilities on Vanguard 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 Vanguard Reit with a short position of Realty Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Reit and Realty Income.
Diversification Opportunities for Vanguard Reit and Realty Income
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vanguard and Realty is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Reit Index and Realty Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realty Income and Vanguard 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 Vanguard Reit Index 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 Vanguard Reit i.e., Vanguard Reit and Realty Income go up and down completely randomly.
Pair Corralation between Vanguard Reit and Realty Income
Assuming the 90 days horizon Vanguard Reit Index is expected to generate 0.98 times more return on investment than Realty Income. However, Vanguard Reit Index is 1.02 times less risky than Realty Income. It trades about -0.06 of its potential returns per unit of risk. Realty Income is currently generating about -0.16 per unit of risk. If you would invest 3,171 in Vanguard Reit Index on September 12, 2024 and sell it today you would lose (32.00) from holding Vanguard Reit Index or give up 1.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vanguard Reit Index vs. Realty Income
Performance |
| Timeline |
| Vanguard Reit Index |
| Realty Income |
Vanguard Reit and Realty Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Reit and Realty Income
The main advantage of trading using opposite Vanguard Reit and Realty Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 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.| Vanguard Reit vs. Artisan High Income | Vanguard Reit vs. Morningstar Defensive Bond | Vanguard Reit vs. Blrc Sgy Mnp | Vanguard Reit vs. Ambrus Core Bond |
| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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