Correlation Between Broadstone Net and National Retail

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

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

Diversification Opportunities for Broadstone Net and National Retail

0.86

Correlation Coefficient

Broadstone Net  National Retail

Very poor diversification

The 3 months correlation between Broadstone and National is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Broadstone Net Lease and National Retail Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Retail Prop and Broadstone Net 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 Broadstone Net Lease are associated (or correlated) with National Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Retail Prop has no effect on the direction of Broadstone Net i.e., Broadstone Net and National Retail go up and down completely randomly.

Pair Corralation between Broadstone Net and National Retail

Considering the 90-day investment horizon Broadstone Net Lease is expected to generate 0.89 times more return on investment than National Retail. However, Broadstone Net Lease is 1.13 times less risky than National Retail. It trades about 0.1 of its potential returns per unit of risk. National Retail Properties is currently generating about 0.05 per unit of risk. If you would invest  1,573  in Broadstone Net Lease on December 22, 2024 and sell it today you would earn a total of  113.00  from holding Broadstone Net Lease or generate 7.18% return on investment over 90 days.

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

Broadstone Net Lease  vs.  National Retail Properties

Broadstone Net Lease

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Broadstone Net Lease are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Broadstone Net may actually be approaching a critical reversion point that can send shares even higher in April 2025.

National Retail Prop

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National Retail Properties are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, National Retail is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Broadstone Net and National Retail

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

The idea behind Broadstone Net Lease and National Retail 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.