Correlation Between Global Net and Orion Office

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Can any of the company-specific risk be diversified away by investing in both Global Net and Orion Office 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 Global Net and Orion Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Net Lease and Orion Office Reit, you can compare the effects of market volatilities on Global Net and Orion Office 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 Global Net with a short position of Orion Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Orion Office.

Diversification Opportunities for Global Net and Orion Office

0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Global and Orion is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Orion Office Reit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orion Office Reit and Global Net 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 Global Net Lease are associated (or correlated) with Orion Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orion Office Reit has no effect on the direction of Global Net i.e., Global Net and Orion Office go up and down completely randomly.

Pair Corralation between Global Net and Orion Office

Considering the 90-day investment horizon Global Net Lease is expected to generate 0.72 times more return on investment than Orion Office. However, Global Net Lease is 1.39 times less risky than Orion Office. It trades about -0.14 of its potential returns per unit of risk. Orion Office Reit is currently generating about -0.13 per unit of risk. If you would invest  732.00  in Global Net Lease on January 20, 2024 and sell it today you would lose (57.00) from holding Global Net Lease or give up 7.79% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Global Net Lease  vs.  Orion Office Reit

 Performance 
       Timeline  
Global Net Lease 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Global Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Orion Office Reit 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Orion Office Reit has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in May 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Global Net and Orion Office Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Global Net and Orion Office

The main advantage of trading using opposite Global Net and Orion Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Net position performs unexpectedly, Orion Office 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 Orion Office will offset losses from the drop in Orion Office's long position.
The idea behind Global Net Lease and Orion Office Reit 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

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