Correlation Between Realty Income and HopTo

Can any of the company-specific risk be diversified away by investing in both Realty Income and HopTo 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 HopTo 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 hopTo Inc, you can compare the effects of market volatilities on Realty Income and HopTo 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 HopTo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and HopTo.

Diversification Opportunities for Realty Income and HopTo

0.28

Correlation Coefficient

Realty Income  HopTo

Modest diversification

The 3 months correlation between Realty and HopTo is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income Corp and hopTo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on hopTo Inc 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 HopTo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of hopTo Inc has no effect on the direction of Realty Income i.e., Realty Income and HopTo go up and down completely randomly.

Pair Corralation between Realty Income and HopTo

Taking into account the 90-day investment horizon Realty Income is expected to generate 4.41 times less return on investment than HopTo. But when comparing it to its historical volatility, Realty Income Corp is 5.85 times less risky than HopTo. It trades about 0.06 of its potential returns per unit of risk. hopTo Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  35.00  in hopTo Inc on January 19, 2024 and sell it today you would earn a total of  1.00  from holding hopTo Inc or generate 2.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	63.41%
Values	Daily Returns

Realty Income Corp  vs.  hopTo Inc

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 latest unsteady performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

hopTo Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days hopTo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Realty Income and HopTo

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

The idea behind Realty Income Corp and hopTo Inc 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..