Correlation Between VICI Properties and British Land

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

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

Diversification Opportunities for VICI Properties and British Land

0.02

Correlation Coefficient

VICI Properties  British Land

Significant diversification

The 3 months correlation between VICI and British is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding VICI Properties and British Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British Land and VICI Properties 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 VICI Properties are associated (or correlated) with British Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British Land has no effect on the direction of VICI Properties i.e., VICI Properties and British Land go up and down completely randomly.

Pair Corralation between VICI Properties and British Land

Given the investment horizon of 90 days VICI Properties is expected to under-perform the British Land. But the stock apears to be less risky and, when comparing its historical volatility, VICI Properties is 1.6 times less risky than British Land. The stock trades about -0.08 of its potential returns per unit of risk. The British Land is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  578.00  in British Land on September 5, 2024 and sell it today you would lose (9.00) from holding British Land or give up 1.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

VICI Properties  vs.  British Land

VICI Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VICI Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, VICI Properties is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

British Land

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with VICI Properties and British Land

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

The idea behind VICI Properties and British Land 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.