Correlation Between CTO Realty and One Liberty

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

By analyzing existing cross correlation between CTO Realty Growth and One Liberty Properties, you can compare the effects of market volatilities on CTO Realty and One Liberty 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 CTO Realty with a short position of One Liberty. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTO Realty and One Liberty.

Diversification Opportunities for CTO Realty and One Liberty

0.72

Correlation Coefficient

CTO Realty  One Liberty

Poor diversification

The 3 months correlation between CTO and One is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding CTO Realty Growth and One Liberty Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Liberty Properties and CTO 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 CTO Realty Growth are associated (or correlated) with One Liberty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Liberty Properties has no effect on the direction of CTO Realty i.e., CTO Realty and One Liberty go up and down completely randomly.

Pair Corralation between CTO Realty and One Liberty

Considering the 90-day investment horizon CTO Realty is expected to generate 1.27 times less return on investment than One Liberty. But when comparing it to its historical volatility, CTO Realty Growth is 1.29 times less risky than One Liberty. It trades about 0.15 of its potential returns per unit of risk. One Liberty Properties is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,754  in One Liberty Properties on August 30, 2024 and sell it today you would earn a total of  261.00  from holding One Liberty Properties or generate 9.48% return on investment over 90 days.

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

CTO Realty Growth  vs.  One Liberty Properties

CTO Realty Growth

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CTO Realty Growth are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, CTO Realty may actually be approaching a critical reversion point that can send shares even higher in December 2024.

One Liberty Properties

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in One Liberty Properties are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, One Liberty reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CTO Realty and One Liberty

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

The idea behind CTO Realty Growth and One Liberty Properties 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.