Correlation Between Safehold and Modiv

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

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

Diversification Opportunities for Safehold and Modiv

-0.12

Correlation Coefficient

Safehold  Modiv

Good diversification

The 3 months correlation between Safehold and Modiv is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Safehold and Modiv Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modiv Inc and Safehold 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 Safehold are associated (or correlated) with Modiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modiv Inc has no effect on the direction of Safehold i.e., Safehold and Modiv go up and down completely randomly.

Pair Corralation between Safehold and Modiv

Given the investment horizon of 90 days Safehold is expected to under-perform the Modiv. In addition to that, Safehold is 1.01 times more volatile than Modiv Inc. It trades about -0.12 of its total potential returns per unit of risk. Modiv Inc is currently generating about -0.01 per unit of volatility. If you would invest  1,645  in Modiv Inc on August 30, 2024 and sell it today you would lose (45.00) from holding Modiv Inc or give up 2.74% of portfolio value over 90 days.

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

Safehold  vs.  Modiv Inc

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.

Modiv Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Modiv Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Modiv is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Safehold and Modiv

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

The idea behind Safehold and Modiv Inc 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.