Correlation Between Vornado Realty and Global Net
Can any of the company-specific risk be diversified away by investing in both Vornado Realty and Global Net 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 Vornado Realty and Global Net into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vornado Realty Trust and Global Net Lease, you can compare the effects of market volatilities on Vornado Realty and Global Net 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 Vornado Realty with a short position of Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vornado Realty and Global Net.
Diversification Opportunities for Vornado Realty and Global Net
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vornado and Global is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Vornado Realty Trust and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease and Vornado Realty 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 Vornado Realty Trust are associated (or correlated) with Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of Vornado Realty i.e., Vornado Realty and Global Net go up and down completely randomly.
Pair Corralation between Vornado Realty and Global Net
Assuming the 90 days trading horizon Vornado Realty Trust is expected to under-perform the Global Net. But the preferred stock apears to be less risky and, when comparing its historical volatility, Vornado Realty Trust is 1.38 times less risky than Global Net. The preferred stock trades about -0.2 of its potential returns per unit of risk. The Global Net Lease is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 2,264 in Global Net Lease on August 27, 2024 and sell it today you would lose (57.00) from holding Global Net Lease or give up 2.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vornado Realty Trust vs. Global Net Lease
Performance |
| Timeline |
| Vornado Realty Trust |
| Global Net Lease |
Vornado Realty and Global Net Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vornado Realty and Global Net
The main advantage of trading using opposite Vornado Realty and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vornado Realty position performs unexpectedly, Global Net 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 Global Net will offset losses from the drop in Global Net's long position.| Vornado Realty vs. Vornado Realty Trust | Vornado Realty vs. Vornado Realty Trust | Vornado Realty vs. Equity Commonwealth | Vornado Realty vs. Hudson Pacific Properties |
| Global Net vs. Global Net Lease | Global Net vs. Global Medical REIT | Global Net vs. City Office REIT | Global Net vs. ARMOUR Residential REIT |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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