Correlation Between VICI Properties and Firm Capital

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

By analyzing existing cross correlation between VICI Properties and Firm Capital Property, you can compare the effects of market volatilities on VICI Properties and Firm Capital 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 Firm Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of VICI Properties and Firm Capital.

Diversification Opportunities for VICI Properties and Firm Capital

-0.49

Correlation Coefficient

VICI Properties  Firm Capital

Very good diversification

The 3 months correlation between VICI and Firm is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding VICI Properties and Firm Capital Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firm Capital Property 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 Firm Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firm Capital Property has no effect on the direction of VICI Properties i.e., VICI Properties and Firm Capital go up and down completely randomly.

Pair Corralation between VICI Properties and Firm Capital

Given the investment horizon of 90 days VICI Properties is expected to generate 2.82 times less return on investment than Firm Capital. But when comparing it to its historical volatility, VICI Properties is 1.11 times less risky than Firm Capital. It trades about 0.03 of its potential returns per unit of risk. Firm Capital Property is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  316.00  in Firm Capital Property on September 5, 2024 and sell it today you would earn a total of  94.00  from holding Firm Capital Property or generate 29.75% return on investment over 90 days.

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

VICI Properties  vs.  Firm Capital Property

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.

Firm Capital Property

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Firm Capital Property are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, Firm Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with VICI Properties and Firm Capital

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

The idea behind VICI Properties and Firm Capital Property 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.