Correlation Between Alexandria Real and Global Net

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

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

Diversification Opportunities for Alexandria Real and Global Net

0.43

Correlation Coefficient

Alexandria Real  Global Net

Very weak diversification

The 3 months correlation between Alexandria and Global is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Alexandria Real Estate and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease and Alexandria 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 Alexandria Real Estate are associated (or correlated) with Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of Alexandria Real i.e., Alexandria Real and Global Net go up and down completely randomly.

Pair Corralation between Alexandria Real and Global Net

Considering the 90-day investment horizon Alexandria Real Estate is expected to under-perform the Global Net. In addition to that, Alexandria Real is 1.02 times more volatile than Global Net Lease. It trades about -0.13 of its total potential returns per unit of risk. Global Net Lease is currently generating about -0.01 per unit of volatility. If you would invest  2,307  in Global Net Lease on October 24, 2024 and sell it today you would lose (38.00) from holding Global Net Lease or give up 1.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Alexandria Real Estate  vs.  Global Net Lease

Alexandria Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alexandria Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Global Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Alexandria Real and Global Net

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

The idea behind Alexandria Real Estate and Global Net Lease 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.