Correlation Between Vastned Retail and National Retail

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

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

Diversification Opportunities for Vastned Retail and National Retail

0.36

Correlation Coefficient

Vastned Retail  National Retail

Weak diversification

The 3 months correlation between Vastned and National is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Vastned Retail NV and National Retail Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Retail Prop and Vastned 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 Vastned Retail NV are associated (or correlated) with National Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Retail Prop has no effect on the direction of Vastned Retail i.e., Vastned Retail and National Retail go up and down completely randomly.

Pair Corralation between Vastned Retail and National Retail

Assuming the 90 days horizon Vastned Retail NV is expected to generate 0.56 times more return on investment than National Retail. However, Vastned Retail NV is 1.79 times less risky than National Retail. It trades about -0.11 of its potential returns per unit of risk. National Retail Properties is currently generating about -0.08 per unit of risk. If you would invest  2,215  in Vastned Retail NV on September 25, 2024 and sell it today you would lose (135.00) from holding Vastned Retail NV or give up 6.09% of portfolio value over 90 days.

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

Vastned Retail NV  vs.  National Retail Properties

Vastned Retail NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vastned Retail NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vastned Retail is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

National Retail Prop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Retail Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Vastned Retail and National Retail

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

The idea behind Vastned Retail NV and National Retail 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.

Check out your portfolio center.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.