Correlation Between Wheeler Real and Essential Properties

Can any of the company-specific risk be diversified away by investing in both Wheeler Real and Essential Properties 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 Wheeler Real and Essential Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wheeler Real Estate and Essential Properties Realty, you can compare the effects of market volatilities on Wheeler Real and Essential Properties 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 Wheeler Real with a short position of Essential Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheeler Real and Essential Properties.

Diversification Opportunities for Wheeler Real and Essential Properties

-0.76

Correlation Coefficient

Wheeler Real  Essential Properties

Pay attention - limited upside

The 3 months correlation between Wheeler and Essential is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Wheeler Real Estate and Essential Properties Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essential Properties and Wheeler Real 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 Wheeler Real Estate are associated (or correlated) with Essential Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essential Properties has no effect on the direction of Wheeler Real i.e., Wheeler Real and Essential Properties go up and down completely randomly.

Pair Corralation between Wheeler Real and Essential Properties

Given the investment horizon of 90 days Wheeler Real Estate is expected to under-perform the Essential Properties. In addition to that, Wheeler Real is 7.52 times more volatile than Essential Properties Realty. It trades about -0.01 of its total potential returns per unit of risk. Essential Properties Realty is currently generating about 0.13 per unit of volatility. If you would invest  2,476  in Essential Properties Realty on March 19, 2024 and sell it today you would earn a total of  271.92  from holding Essential Properties Realty or generate 10.98% return on investment over 90 days.

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

Wheeler Real Estate  vs.  Essential Properties Realty

Wheeler Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wheeler Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's essential indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Essential Properties

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Essential Properties Realty are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Essential Properties unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wheeler Real and Essential Properties

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

The idea behind Wheeler Real Estate and Essential Properties Realty 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.