Correlation Between Agree Realty and Maui Land

Can any of the company-specific risk be diversified away by investing in both Agree Realty and Maui Land 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 Agree Realty and Maui Land into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Agree Realty and Maui Land Pineapple, you can compare the effects of market volatilities on Agree Realty and Maui Land 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 Agree Realty with a short position of Maui Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agree Realty and Maui Land.

Diversification Opportunities for Agree Realty and Maui Land

-0.47

Correlation Coefficient

Agree Realty  Maui Land

Very good diversification

The 3 months correlation between Agree and Maui is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Agree Realty and Maui Land Pineapple in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maui Land Pineapple and Agree Realty 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 Agree Realty are associated (or correlated) with Maui Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maui Land Pineapple has no effect on the direction of Agree Realty i.e., Agree Realty and Maui Land go up and down completely randomly.

Pair Corralation between Agree Realty and Maui Land

Assuming the 90 days trading horizon Agree Realty is expected to under-perform the Maui Land. But the preferred stock apears to be less risky and, when comparing its historical volatility, Agree Realty is 2.69 times less risky than Maui Land. The preferred stock trades about -0.01 of its potential returns per unit of risk. The Maui Land Pineapple is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2,471  in Maui Land Pineapple on September 2, 2024 and sell it today you would lose (46.00) from holding Maui Land Pineapple or give up 1.86% of portfolio value over 90 days.

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

Agree Realty  vs.  Maui Land Pineapple

Agree Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agree Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Agree Realty is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Maui Land Pineapple

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maui Land Pineapple has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, Maui Land is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Agree Realty and Maui Land

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

The idea behind Agree Realty and Maui Land Pineapple 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.