Correlation Between Artis REIT and Essential Properties

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

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

Diversification Opportunities for Artis REIT and Essential Properties

0.65

Correlation Coefficient

Artis REIT  Essential Properties

Poor diversification

The 3 months correlation between Artis and Essential is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Artis REIT and Essential Properties Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essential Properties and Artis REIT 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 Artis REIT are associated (or correlated) with Essential Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essential Properties has no effect on the direction of Artis REIT i.e., Artis REIT and Essential Properties go up and down completely randomly.

Pair Corralation between Artis REIT and Essential Properties

Assuming the 90 days horizon Artis REIT is expected to under-perform the Essential Properties. But the otc stock apears to be less risky and, when comparing its historical volatility, Artis REIT is 1.17 times less risky than Essential Properties. The otc stock trades about -0.16 of its potential returns per unit of risk. The Essential Properties Realty is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  3,350  in Essential Properties Realty on October 26, 2024 and sell it today you would lose (209.00) from holding Essential Properties Realty or give up 6.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.5%
Values	Daily Returns

Artis REIT  vs.  Essential Properties Realty

Artis REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Artis REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Essential Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Essential Properties Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Essential Properties is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Artis REIT and Essential Properties

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

The idea behind Artis REIT and Essential Properties Realty 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.