Correlation Between CareTrust REIT and Veris Residential

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

By analyzing existing cross correlation between CareTrust REIT and Veris Residential, you can compare the effects of market volatilities on CareTrust REIT and Veris Residential 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 CareTrust REIT with a short position of Veris Residential. Check out your portfolio center. Please also check ongoing floating volatility patterns of CareTrust REIT and Veris Residential.

Diversification Opportunities for CareTrust REIT and Veris Residential

-0.01

Correlation Coefficient

CareTrust REIT  Veris Residential

Good diversification

The 3 months correlation between CareTrust and Veris is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding CareTrust REIT and Veris Residential in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veris Residential and CareTrust 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 CareTrust REIT are associated (or correlated) with Veris Residential. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veris Residential has no effect on the direction of CareTrust REIT i.e., CareTrust REIT and Veris Residential go up and down completely randomly.

Pair Corralation between CareTrust REIT and Veris Residential

Given the investment horizon of 90 days CareTrust REIT is expected to under-perform the Veris Residential. In addition to that, CareTrust REIT is 1.04 times more volatile than Veris Residential. It trades about -0.12 of its total potential returns per unit of risk. Veris Residential is currently generating about -0.09 per unit of volatility. If you would invest  1,792  in Veris Residential on September 25, 2024 and sell it today you would lose (151.00) from holding Veris Residential or give up 8.43% of portfolio value over 90 days.

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

CareTrust REIT  vs.  Veris Residential

CareTrust REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CareTrust REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Veris Residential

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veris Residential has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with CareTrust REIT and Veris Residential

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

The idea behind CareTrust REIT and Veris Residential 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.