Correlation Between Alexanders and Realty Income

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

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

Diversification Opportunities for Alexanders and Realty Income

0.39

Correlation Coefficient

Alexanders  Realty Income

Weak diversification

The 3 months correlation between Alexanders and Realty is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Alexanders 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 Alexanders 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 Alexanders 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 Alexanders i.e., Alexanders and Realty Income go up and down completely randomly.

Pair Corralation between Alexanders and Realty Income

Considering the 90-day investment horizon Alexanders is expected to generate 4.57 times less return on investment than Realty Income. In addition to that, Alexanders is 1.19 times more volatile than Realty Income Corp. It trades about 0.02 of its total potential returns per unit of risk. Realty Income Corp is currently generating about 0.1 per unit of volatility. If you would invest  5,192  in Realty Income Corp on January 24, 2024 and sell it today you would earn a total of  141.00  from holding Realty Income Corp or generate 2.72% return on investment over 90 days.

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

Alexanders  vs.  Realty Income Corp

Alexanders

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alexanders has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Alexanders is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Realty me Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Realty Income Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Realty Income is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Alexanders and Realty Income

The main advantage of trading using opposite Alexanders and Realty Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alexanders 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.

The idea behind Alexanders and Realty Income Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.