Correlation Between Agree Realty and Realty Income

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

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

Diversification Opportunities for Agree Realty and Realty Income

0.94

Correlation Coefficient

Agree Realty  Realty Income

Almost no diversification

The 3 months correlation between Agree and Realty is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Agree Realty and Realty Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realty Income 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 Realty Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realty Income has no effect on the direction of Agree Realty i.e., Agree Realty and Realty Income go up and down completely randomly.

Pair Corralation between Agree Realty and Realty Income

Assuming the 90 days trading horizon Agree Realty is expected to generate 0.88 times more return on investment than Realty Income. However, Agree Realty is 1.14 times less risky than Realty Income. It trades about 0.04 of its potential returns per unit of risk. Realty Income is currently generating about 0.0 per unit of risk. If you would invest  1,588  in Agree Realty on October 4, 2024 and sell it today you would earn a total of  244.00  from holding Agree Realty or generate 15.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.73%
Values	Daily Returns

Agree Realty  vs.  Realty Income

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 latest unsteady performance, the Preferred Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Realty Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Realty Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Agree Realty and Realty Income

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

The idea behind Agree Realty and Realty Income 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.