Correlation Between Realty Income and AGREE RLTY

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

By analyzing existing cross correlation between Realty Income and AGREE RLTY P, you can compare the effects of market volatilities on Realty Income and AGREE RLTY 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 AGREE RLTY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and AGREE RLTY.

Diversification Opportunities for Realty Income and AGREE RLTY

-0.19

Correlation Coefficient

Realty Income  AGREE RLTY

Good diversification

The 3 months correlation between Realty and AGREE is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income and AGREE RLTY P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGREE RLTY P 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 AGREE RLTY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGREE RLTY P has no effect on the direction of Realty Income i.e., Realty Income and AGREE RLTY go up and down completely randomly.

Pair Corralation between Realty Income and AGREE RLTY

Assuming the 90 days horizon Realty Income is expected to generate 3.08 times less return on investment than AGREE RLTY. But when comparing it to its historical volatility, Realty Income is 1.01 times less risky than AGREE RLTY. It trades about 0.05 of its potential returns per unit of risk. AGREE RLTY P is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  5,502  in AGREE RLTY P on September 23, 2024 and sell it today you would earn a total of  1,222  from holding AGREE RLTY P or generate 22.21% return on investment over 90 days.

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

Realty Income  vs.  AGREE RLTY P

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. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

AGREE RLTY P

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AGREE RLTY P are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, AGREE RLTY is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Realty Income and AGREE RLTY

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

The idea behind Realty Income and AGREE RLTY P 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.