Correlation Between Realty Income and Site Centers

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

Diversification Opportunities for Realty Income and Site Centers

0.63
  Correlation Coefficient

Poor diversification

The 3 months correlation between Realty and Site is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income Corp and Site Centers Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Site Centers Corp 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 Site Centers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Site Centers Corp has no effect on the direction of Realty Income i.e., Realty Income and Site Centers go up and down completely randomly.

Pair Corralation between Realty Income and Site Centers

Taking into account the 90-day investment horizon Realty Income Corp is expected to generate 0.73 times more return on investment than Site Centers. However, Realty Income Corp is 1.36 times less risky than Site Centers. It trades about 0.43 of its potential returns per unit of risk. Site Centers Corp is currently generating about 0.27 per unit of risk. If you would invest  5,266  in Realty Income Corp on April 26, 2024 and sell it today you would earn a total of  460.00  from holding Realty Income Corp or generate 8.74% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Realty Income Corp  vs.  Site Centers Corp

 Performance 
       Timeline  
Realty Income Corp 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Realty Income Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Realty Income may actually be approaching a critical reversion point that can send shares even higher in August 2024.
Site Centers Corp 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Site Centers Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Site Centers exhibited solid returns over the last few months and may actually be approaching a breakup point.

Realty Income and Site Centers Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Realty Income and Site Centers

The main advantage of trading using opposite Realty Income and Site Centers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realty Income position performs unexpectedly, Site Centers 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 Site Centers will offset losses from the drop in Site Centers' long position.
The idea behind Realty Income Corp and Site Centers 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.
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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