Correlation Between Inland Real and Global Net

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

By analyzing existing cross correlation between Inland Real Estateome and Global Net Lease,, you can compare the effects of market volatilities on Inland Real and Global Net 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 Inland Real with a short position of Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inland Real and Global Net.

Diversification Opportunities for Inland Real and Global Net

-0.34

Correlation Coefficient

Inland Real  Global Net

Very good diversification

The 3 months correlation between Inland and Global is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Inland Real Estateome and Global Net Lease, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease, and Inland Real 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 Inland Real Estateome are associated (or correlated) with Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease, has no effect on the direction of Inland Real i.e., Inland Real and Global Net go up and down completely randomly.

Pair Corralation between Inland Real and Global Net

Given the investment horizon of 90 days Inland Real Estateome is expected to generate 1.95 times more return on investment than Global Net. However, Inland Real is 1.95 times more volatile than Global Net Lease,. It trades about 0.01 of its potential returns per unit of risk. Global Net Lease, is currently generating about -0.17 per unit of risk. If you would invest  1,104  in Inland Real Estateome on September 5, 2024 and sell it today you would lose (4.00) from holding Inland Real Estateome or give up 0.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Inland Real Estateome  vs.  Global Net Lease,

Inland Real Estateome

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inland Real Estateome has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Inland Real is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Global Net Lease,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Net Lease, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Inland Real and Global Net

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

The idea behind Inland Real Estateome and Global Net Lease, 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.