Correlation Between W P and Realty Income
Can any of the company-specific risk be diversified away by investing in both W P 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 W P and Realty Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between W P Carey and Realty Income Corp, you can compare the effects of market volatilities on W P 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 W P with a short position of Realty Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of W P and Realty Income.
Diversification Opportunities for W P and Realty Income
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between WPC and Realty is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding W P Carey 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 W P 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 W P Carey 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 W P i.e., W P and Realty Income go up and down completely randomly.
Pair Corralation between W P and Realty Income
Considering the 90-day investment horizon W P Carey is expected to generate 1.14 times more return on investment than Realty Income. However, W P is 1.14 times more volatile than Realty Income Corp. It trades about 0.09 of its potential returns per unit of risk. Realty Income Corp is currently generating about 0.1 per unit of risk. If you would invest 5,472 in W P Carey on January 25, 2024 and sell it today you would earn a total of 159.00 from holding W P Carey or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
W P Carey vs. Realty Income Corp
Performance |
| Timeline |
| W P Carey |
| Realty me Corp |
W P and Realty Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with W P and Realty Income
The main advantage of trading using opposite W P and Realty Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if W P 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.| W P vs. Investcorp Credit Management | W P vs. Mingzhu Logistics HoldingsLtd | W P vs. Aquagold International | W P vs. Morningstar Unconstrained Allocation |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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