Correlation Between Broadstone Net and Safehold

Can any of the company-specific risk be diversified away by investing in both Broadstone Net 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 Broadstone Net and Safehold 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 Safehold, you can compare the effects of market volatilities on Broadstone Net 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 Broadstone Net with a short position of Safehold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadstone Net and Safehold.

Diversification Opportunities for Broadstone Net and Safehold

0.62

Correlation Coefficient

Broadstone Net  Safehold

Poor diversification

The 3 months correlation between Broadstone and Safehold is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Broadstone Net Lease and Safehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safehold 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 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 Broadstone Net i.e., Broadstone Net and Safehold go up and down completely randomly.

Pair Corralation between Broadstone Net and Safehold

Considering the 90-day investment horizon Broadstone Net Lease is expected to generate 0.55 times more return on investment than Safehold. However, Broadstone Net Lease is 1.82 times less risky than Safehold. It trades about 0.11 of its potential returns per unit of risk. Safehold is currently generating about 0.0 per unit of risk. If you would invest  1,564  in Broadstone Net Lease on December 30, 2024 and sell it today you would earn a total of  133.00  from holding Broadstone Net Lease or generate 8.5% return on investment over 90 days.

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

Broadstone Net Lease  vs.  Safehold

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 8 (%) 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.

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 Broadstone Net and Safehold

The main advantage of trading using opposite Broadstone Net and Safehold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadstone Net 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 Broadstone Net Lease 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.