Correlation Between Broadstone Net and VICI Properties

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

Diversification Opportunities for Broadstone Net and VICI Properties

0.86

Correlation Coefficient

Broadstone Net  VICI Properties

Very poor diversification

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

Pair Corralation between Broadstone Net and VICI Properties

Considering the 90-day investment horizon Broadstone Net is expected to generate 1.27 times less return on investment than VICI Properties. In addition to that, Broadstone Net is 1.05 times more volatile than VICI Properties. It trades about 0.11 of its total potential returns per unit of risk. VICI Properties is currently generating about 0.15 per unit of volatility. If you would invest  2,862  in VICI Properties on December 29, 2024 and sell it today you would earn a total of  339.00  from holding VICI Properties or generate 11.84% 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.  VICI 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 8 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Broadstone Net may actually be approaching a critical reversion point that can send shares even higher in April 2025.

VICI Properties

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VICI Properties are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, VICI Properties may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Broadstone Net and VICI Properties

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

The idea behind Broadstone Net Lease and VICI 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.