Correlation Between One Liberty and Safehold

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

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

Diversification Opportunities for One Liberty and Safehold

-0.48

Correlation Coefficient

One Liberty  Safehold

Very good diversification

The 3 months correlation between One and Safehold is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding One Liberty Properties and Safehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safehold and One Liberty 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 One Liberty Properties are associated (or correlated) with Safehold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safehold has no effect on the direction of One Liberty i.e., One Liberty and Safehold go up and down completely randomly.

Pair Corralation between One Liberty and Safehold

Considering the 90-day investment horizon One Liberty Properties is expected to generate 0.57 times more return on investment than Safehold. However, One Liberty Properties is 1.75 times less risky than Safehold. It trades about 0.06 of its potential returns per unit of risk. Safehold is currently generating about 0.0 per unit of risk. If you would invest  2,000  in One Liberty Properties on August 30, 2024 and sell it today you would earn a total of  1,015  from holding One Liberty Properties or generate 50.75% return on investment over 90 days.

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

One Liberty Properties  vs.  Safehold

One Liberty Properties

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in One Liberty Properties are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, One Liberty reported solid returns over the last few months and may actually be approaching a breakup point.

Safehold

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safehold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with One Liberty and Safehold

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

The idea behind One Liberty Properties and Safehold 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.