Correlation Between Agree Realty and One Liberty

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

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

Diversification Opportunities for Agree Realty and One Liberty

0.42

Correlation Coefficient

Agree Realty  One Liberty

Very weak diversification

The 3 months correlation between Agree and One is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Agree Realty and One Liberty Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Liberty Properties 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 One Liberty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Liberty Properties has no effect on the direction of Agree Realty i.e., Agree Realty and One Liberty go up and down completely randomly.

Pair Corralation between Agree Realty and One Liberty

Assuming the 90 days trading horizon Agree Realty is expected to under-perform the One Liberty. But the preferred stock apears to be less risky and, when comparing its historical volatility, Agree Realty is 1.46 times less risky than One Liberty. The preferred stock trades about -0.08 of its potential returns per unit of risk. The One Liberty Properties is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  2,661  in One Liberty Properties on December 28, 2024 and sell it today you would lose (50.00) from holding One Liberty Properties or give up 1.88% of portfolio value over 90 days.

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

Agree Realty  vs.  One Liberty Properties

Agree Realty

Risk-Adjusted Performance

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.

One Liberty Properties

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Agree Realty and One Liberty

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

The idea behind Agree Realty and One Liberty Properties 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.