Correlation Between W P and STAG Industrial
Can any of the company-specific risk be diversified away by investing in both W P and STAG Industrial 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 W P and STAG Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between W P Carey and STAG Industrial, you can compare the effects of market volatilities on W P and STAG Industrial 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 W P with a short position of STAG Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of W P and STAG Industrial.
Diversification Opportunities for W P and STAG Industrial
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between WPC and STAG is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding W P Carey and STAG Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STAG Industrial and W P 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 W P Carey are associated (or correlated) with STAG Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STAG Industrial has no effect on the direction of W P i.e., W P and STAG Industrial go up and down completely randomly.
Pair Corralation between W P and STAG Industrial
Considering the 90-day investment horizon W P Carey is expected to generate 0.75 times more return on investment than STAG Industrial. However, W P Carey is 1.33 times less risky than STAG Industrial. It trades about 0.01 of its potential returns per unit of risk. STAG Industrial is currently generating about -0.01 per unit of risk. If you would invest 5,748 in W P Carey on August 27, 2024 and sell it today you would earn a total of 6.00 from holding W P Carey or generate 0.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
W P Carey vs. STAG Industrial
Performance |
| Timeline |
| W P Carey |
| STAG Industrial |
W P and STAG Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with W P and STAG Industrial
The main advantage of trading using opposite W P and STAG Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if W P position performs unexpectedly, STAG Industrial 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 STAG Industrial will offset losses from the drop in STAG Industrial's long position.| W P vs. STAG Industrial | W P vs. National Retail Properties | W P vs. Medical Properties Trust | W P vs. Omega Healthcare Investors |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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