Correlation Between Meritor and Realty Income
Can any of the company-specific risk be diversified away by investing in both Meritor and Realty Income 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 Meritor and Realty Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meritor and Realty Income Corp, you can compare the effects of market volatilities on Meritor and Realty Income 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 Meritor with a short position of Realty Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meritor and Realty Income.
Diversification Opportunities for Meritor and Realty Income
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Meritor and Realty is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Meritor and Realty Income Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realty me Corp and Meritor 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 Meritor are associated (or correlated) with Realty Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realty me Corp has no effect on the direction of Meritor i.e., Meritor and Realty Income go up and down completely randomly.
Pair Corralation between Meritor and Realty Income
Given the investment horizon of 90 days Meritor is expected to generate 0.13 times more return on investment than Realty Income. However, Meritor is 7.45 times less risky than Realty Income. It trades about 0.14 of its potential returns per unit of risk. Realty Income Corp is currently generating about -0.02 per unit of risk. If you would invest 3,595 in Meritor on January 24, 2024 and sell it today you would earn a total of 55.00 from holding Meritor or generate 1.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 12.96% |
Values | Daily Returns |
Meritor vs. Realty Income Corp
Performance |
Timeline |
Meritor |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Realty me Corp |
Meritor and Realty Income Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Meritor and Realty Income
The main advantage of trading using opposite Meritor and Realty Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meritor position performs unexpectedly, Realty Income 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 Realty Income will offset losses from the drop in Realty Income's long position.Meritor vs. Mangazeya Mining | Meritor vs. Barrick Gold Corp | Meritor vs. Weibo Corp | Meritor vs. Getty Images Holdings |
Realty Income vs. Federal Realty Investment | Realty Income vs. Macerich Company | Realty Income vs. National Retail Properties | Realty Income vs. Kimco Realty |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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