Correlation Between Realty Income and W P
Can any of the company-specific risk be diversified away by investing in both Realty Income and W P 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 Realty Income and W P into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Realty Income Corp and W P Carey, you can compare the effects of market volatilities on Realty Income and W P 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 Realty Income with a short position of W P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and W P.
Diversification Opportunities for Realty Income and W P
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Realty and WPC is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income Corp and W P Carey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W P Carey and Realty Income 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 Realty Income Corp are associated (or correlated) with W P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W P Carey has no effect on the direction of Realty Income i.e., Realty Income and W P go up and down completely randomly.
Pair Corralation between Realty Income and W P
Taking into account the 90-day investment horizon Realty Income Corp is expected to generate 0.9 times more return on investment than W P. However, Realty Income Corp is 1.11 times less risky than W P. It trades about -0.02 of its potential returns per unit of risk. W P Carey is currently generating about -0.02 per unit of risk. If you would invest 6,220 in Realty Income Corp on January 24, 2024 and sell it today you would lose (881.00) from holding Realty Income Corp or give up 14.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Realty Income Corp vs. W P Carey
Performance |
| Timeline |
| Realty me Corp |
| W P Carey |
Realty Income and W P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Realty Income and W P
The main advantage of trading using opposite Realty Income and W P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realty Income position performs unexpectedly, W P 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 W P will offset losses from the drop in W P's long position.| Realty Income vs. Federal Realty Investment | Realty Income vs. Macerich Company | Realty Income vs. National Retail Properties | Realty Income vs. Kimco Realty |
| W P vs. STAG Industrial | W P vs. National Retail Properties | W P vs. Medical Properties Trust | W P vs. Omega Healthcare Investors |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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