Correlation Between Modiv and AMREP

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

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

Diversification Opportunities for Modiv and AMREP

0.38

Correlation Coefficient

Modiv  AMREP

Weak diversification

The 3 months correlation between Modiv and AMREP is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Modiv Inc and AMREP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMREP and Modiv 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 Modiv Inc are associated (or correlated) with AMREP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMREP has no effect on the direction of Modiv i.e., Modiv and AMREP go up and down completely randomly.

Pair Corralation between Modiv and AMREP

Considering the 90-day investment horizon Modiv Inc is expected to under-perform the AMREP. But the stock apears to be less risky and, when comparing its historical volatility, Modiv Inc is 1.05 times less risky than AMREP. The stock trades about -0.01 of its potential returns per unit of risk. The AMREP is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,060  in AMREP on March 10, 2024 and sell it today you would earn a total of  65.00  from holding AMREP or generate 3.16% return on investment over 90 days.

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

Modiv Inc  vs.  AMREP

Modiv Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Modiv Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Modiv may actually be approaching a critical reversion point that can send shares even higher in July 2024.

AMREP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMREP has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Modiv and AMREP

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

The idea behind Modiv Inc and AMREP 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.