Correlation Between Agree Realty and Safehold

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

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

Diversification Opportunities for Agree Realty and Safehold

0.46

Correlation Coefficient

Agree Realty  Safehold

Very weak diversification

The 3 months correlation between Agree and Safehold is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Agree Realty and Safehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safehold 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 Safehold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safehold has no effect on the direction of Agree Realty i.e., Agree Realty and Safehold go up and down completely randomly.

Pair Corralation between Agree Realty and Safehold

Considering the 90-day investment horizon Agree Realty is expected to generate 0.47 times more return on investment than Safehold. However, Agree Realty is 2.13 times less risky than Safehold. It trades about 0.15 of its potential returns per unit of risk. Safehold is currently generating about 0.0 per unit of risk. If you would invest  6,918  in Agree Realty on December 29, 2024 and sell it today you would earn a total of  745.00  from holding Agree Realty or generate 10.77% return on investment over 90 days.

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

Agree Realty  vs.  Safehold

Agree Realty

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agree Realty are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Agree Realty may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Safehold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Safehold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Safehold is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Agree Realty and Safehold

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

The idea behind Agree Realty and Safehold 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.