Correlation Between Necessity Retail and Medalist Diversified

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

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

Diversification Opportunities for Necessity Retail and Medalist Diversified

0.33

Correlation Coefficient

Necessity Retail  Medalist Diversified

Weak diversification

The 3 months correlation between Necessity and Medalist is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Necessity Retail REIT and Medalist Diversified Reit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medalist Diversified Reit and Necessity Retail 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 Necessity Retail REIT are associated (or correlated) with Medalist Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medalist Diversified Reit has no effect on the direction of Necessity Retail i.e., Necessity Retail and Medalist Diversified go up and down completely randomly.

Pair Corralation between Necessity Retail and Medalist Diversified

If you would invest  2,105  in Necessity Retail REIT on September 14, 2024 and sell it today you would earn a total of  0.00  from holding Necessity Retail REIT or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Necessity Retail REIT  vs.  Medalist Diversified Reit

Necessity Retail REIT

Risk-Adjusted Performance

0 of 100

Very Weak

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

Medalist Diversified Reit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medalist Diversified Reit has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Necessity Retail and Medalist Diversified

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

The idea behind Necessity Retail REIT and Medalist Diversified Reit 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.