Correlation Between Modiv and Presidio Property

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

By analyzing existing cross correlation between Modiv Inc and Presidio Property Trust, you can compare the effects of market volatilities on Modiv and Presidio Property 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 Modiv with a short position of Presidio Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modiv and Presidio Property.

Diversification Opportunities for Modiv and Presidio Property

0.28

Correlation Coefficient

Modiv  Presidio Property

Modest diversification

The 3 months correlation between Modiv and Presidio is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Modiv Inc and Presidio Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Presidio Property Trust and Modiv 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 Modiv Inc are associated (or correlated) with Presidio Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Presidio Property Trust has no effect on the direction of Modiv i.e., Modiv and Presidio Property go up and down completely randomly.

Pair Corralation between Modiv and Presidio Property

Considering the 90-day investment horizon Modiv Inc is expected to generate 0.35 times more return on investment than Presidio Property. However, Modiv Inc is 2.84 times less risky than Presidio Property. It trades about 0.04 of its potential returns per unit of risk. Presidio Property Trust is currently generating about 0.01 per unit of risk. If you would invest  1,543  in Modiv Inc on August 31, 2024 and sell it today you would earn a total of  57.00  from holding Modiv Inc or generate 3.69% return on investment over 90 days.

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

Modiv Inc  vs.  Presidio Property Trust

Modiv Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Modiv Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, Modiv is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Presidio Property Trust

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Modiv and Presidio Property

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

The idea behind Modiv Inc and Presidio Property Trust 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.