Correlation Between Realty Income and Federal Realty
Can any of the company-specific risk be diversified away by investing in both Realty Income and Federal 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 Realty Income and Federal Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Realty Income Corp and Federal Realty Investment, you can compare the effects of market volatilities on Realty Income and Federal 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 Realty Income with a short position of Federal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and Federal Realty.
Diversification Opportunities for Realty Income and Federal Realty
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Realty and Federal is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income Corp and Federal Realty Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Realty Investment and Realty Income 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 Realty Income Corp are associated (or correlated) with Federal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Realty Investment has no effect on the direction of Realty Income i.e., Realty Income and Federal Realty go up and down completely randomly.
Pair Corralation between Realty Income and Federal Realty
Taking into account the 90-day investment horizon Realty Income is expected to generate 1.25 times less return on investment than Federal Realty. But when comparing it to its historical volatility, Realty Income Corp is 1.13 times less risky than Federal Realty. It trades about 0.01 of its potential returns per unit of risk. Federal Realty Investment is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 9,836 in Federal Realty Investment on January 20, 2024 and sell it today you would earn a total of 17.00 from holding Federal Realty Investment or generate 0.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 97.73% |
Values | Daily Returns |
Realty Income Corp vs. Federal Realty Investment
Performance |
Timeline |
Realty me Corp |
Federal Realty Investment |
Realty Income and Federal Realty Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Realty Income and Federal Realty
The main advantage of trading using opposite Realty Income and Federal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realty Income position performs unexpectedly, Federal 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 Federal Realty will offset losses from the drop in Federal Realty's long position.Realty Income vs. Federal Realty Investment | Realty Income vs. Macerich Company | Realty Income vs. National Retail Properties | Realty Income vs. Kimco Realty |
Federal Realty vs. Agree Realty | Federal Realty vs. Regency Centers | Federal Realty vs. NetstreitCorp | Federal Realty vs. Kimco Realty |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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