Correlation Between Five Point and CTO Realty

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

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

Diversification Opportunities for Five Point and CTO Realty

-0.5

Correlation Coefficient

Five Point  CTO Realty

Very good diversification

The 3 months correlation between Five and CTO is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Five Point Holdings and CTO Realty Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTO Realty Growth and Five Point 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 Five Point Holdings are associated (or correlated) with CTO Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTO Realty Growth has no effect on the direction of Five Point i.e., Five Point and CTO Realty go up and down completely randomly.

Pair Corralation between Five Point and CTO Realty

Considering the 90-day investment horizon Five Point Holdings is expected to generate 2.74 times more return on investment than CTO Realty. However, Five Point is 2.74 times more volatile than CTO Realty Growth. It trades about 0.02 of its potential returns per unit of risk. CTO Realty Growth is currently generating about 0.04 per unit of risk. If you would invest  283.00  in Five Point Holdings on January 25, 2024 and sell it today you would earn a total of  12.00  from holding Five Point Holdings or generate 4.24% return on investment over 90 days.

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

Five Point Holdings  vs.  CTO Realty Growth

Five Point Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Five Point Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

CTO Realty Growth

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CTO Realty Growth are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CTO Realty is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Five Point and CTO Realty

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

The idea behind Five Point Holdings and CTO Realty Growth 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.