Correlation Between Medalist Diversified and CTO Realty

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

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

Diversification Opportunities for Medalist Diversified and CTO Realty

0.21

Correlation Coefficient

Medalist Diversified  CTO Realty

Modest diversification

The 3 months correlation between Medalist and CTO is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Medalist Diversified Reit and CTO Realty Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTO Realty Growth and Medalist Diversified 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 Medalist Diversified Reit are associated (or correlated) with CTO Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTO Realty Growth has no effect on the direction of Medalist Diversified i.e., Medalist Diversified and CTO Realty go up and down completely randomly.

Pair Corralation between Medalist Diversified and CTO Realty

Given the investment horizon of 90 days Medalist Diversified Reit is expected to generate 2.14 times more return on investment than CTO Realty. However, Medalist Diversified is 2.14 times more volatile than CTO Realty Growth. It trades about 0.02 of its potential returns per unit of risk. CTO Realty Growth is currently generating about 0.05 per unit of risk. If you would invest  1,077  in Medalist Diversified Reit on September 13, 2024 and sell it today you would earn a total of  153.00  from holding Medalist Diversified Reit or generate 14.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Medalist Diversified Reit  vs.  CTO Realty Growth

Medalist Diversified Reit

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Medalist Diversified Reit are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Medalist Diversified is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

CTO Realty Growth

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CTO Realty Growth are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, CTO Realty may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Medalist Diversified and CTO Realty

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

The idea behind Medalist Diversified Reit and CTO Realty Growth 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.