Correlation Between Realty Income and Gaming Leisure

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

By analyzing existing cross correlation between Realty Income and Gaming Leisure Properties, you can compare the effects of market volatilities on Realty Income and Gaming Leisure 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 Realty Income with a short position of Gaming Leisure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and Gaming Leisure.

Diversification Opportunities for Realty Income and Gaming Leisure

0.69

Correlation Coefficient

Realty Income  Gaming Leisure

Poor diversification

The 3 months correlation between Realty and Gaming is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income and Gaming Leisure Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming Leisure Properties and Realty Income 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 Realty Income are associated (or correlated) with Gaming Leisure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming Leisure Properties has no effect on the direction of Realty Income i.e., Realty Income and Gaming Leisure go up and down completely randomly.

Pair Corralation between Realty Income and Gaming Leisure

Taking into account the 90-day investment horizon Realty Income is expected to generate 4.12 times less return on investment than Gaming Leisure. In addition to that, Realty Income is 1.04 times more volatile than Gaming Leisure Properties. It trades about 0.01 of its total potential returns per unit of risk. Gaming Leisure Properties is currently generating about 0.03 per unit of volatility. If you would invest  4,630  in Gaming Leisure Properties on August 31, 2024 and sell it today you would earn a total of  536.00  from holding Gaming Leisure Properties or generate 11.58% return on investment over 90 days.

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

Realty Income  vs.  Gaming Leisure Properties

Realty Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Realty Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Realty Income is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Gaming Leisure Properties

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gaming Leisure Properties are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Gaming Leisure is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Realty Income and Gaming Leisure

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

The idea behind Realty Income and Gaming Leisure Properties 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.