Correlation Between GPT and W P

Can any of the company-specific risk be diversified away by investing in both GPT and W P 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 GPT and W P into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GPT Group and W P Carey, you can compare the effects of market volatilities on GPT and W P 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 GPT with a short position of W P. Check out your portfolio center. Please also check ongoing floating volatility patterns of GPT and W P.

Diversification Opportunities for GPT and W P

0.69

Correlation Coefficient

GPT  W P

Poor diversification

The 3 months correlation between GPT and WPY is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding GPT Group and W P Carey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W P Carey and GPT 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 GPT Group are associated (or correlated) with W P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W P Carey has no effect on the direction of GPT i.e., GPT and W P go up and down completely randomly.

Pair Corralation between GPT and W P

Assuming the 90 days horizon GPT Group is expected to generate 1.37 times more return on investment than W P. However, GPT is 1.37 times more volatile than W P Carey. It trades about -0.13 of its potential returns per unit of risk. W P Carey is currently generating about -0.23 per unit of risk. If you would invest  276.00  in GPT Group on September 23, 2024 and sell it today you would lose (11.00) from holding GPT Group or give up 3.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

GPT Group  vs.  W P Carey

GPT Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GPT Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

W P Carey

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days W P Carey has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with GPT and W P

The main advantage of trading using opposite GPT and W P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GPT position performs unexpectedly, W P 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 W P will offset losses from the drop in W P's long position.

The idea behind GPT Group and W P Carey pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.