Correlation Between National Retail and VARIOUS EATERIES

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

By analyzing existing cross correlation between National Retail Properties and VARIOUS EATERIES LS, you can compare the effects of market volatilities on National Retail and VARIOUS EATERIES 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 National Retail with a short position of VARIOUS EATERIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and VARIOUS EATERIES.

Diversification Opportunities for National Retail and VARIOUS EATERIES

-0.18

Correlation Coefficient

National Retail  VARIOUS EATERIES

Good diversification

The 3 months correlation between National and VARIOUS is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and VARIOUS EATERIES LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VARIOUS EATERIES and National Retail 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 National Retail Properties are associated (or correlated) with VARIOUS EATERIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VARIOUS EATERIES has no effect on the direction of National Retail i.e., National Retail and VARIOUS EATERIES go up and down completely randomly.

Pair Corralation between National Retail and VARIOUS EATERIES

Assuming the 90 days trading horizon National Retail is expected to generate 14.52 times less return on investment than VARIOUS EATERIES. In addition to that, National Retail is 1.12 times more volatile than VARIOUS EATERIES LS. It trades about 0.0 of its total potential returns per unit of risk. VARIOUS EATERIES LS is currently generating about 0.06 per unit of volatility. If you would invest  20.00  in VARIOUS EATERIES LS on September 3, 2024 and sell it today you would earn a total of  1.00  from holding VARIOUS EATERIES LS or generate 5.0% return on investment over 90 days.

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

National Retail Properties  vs.  VARIOUS EATERIES LS

National Retail Prop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Retail Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, National Retail is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

VARIOUS EATERIES

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VARIOUS EATERIES LS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, VARIOUS EATERIES is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with National Retail and VARIOUS EATERIES

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

The idea behind National Retail Properties and VARIOUS EATERIES LS 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.