Correlation Between Broadstone Net and W P

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

Diversification Opportunities for Broadstone Net and W P

0.83

Correlation Coefficient

Broadstone Net  W P

Very poor diversification

The 3 months correlation between Broadstone and WPC is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Broadstone Net Lease and W P Carey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W P Carey 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 W P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W P Carey has no effect on the direction of Broadstone Net i.e., Broadstone Net and W P go up and down completely randomly.

Pair Corralation between Broadstone Net and W P

Considering the 90-day investment horizon Broadstone Net Lease is expected to generate 0.99 times more return on investment than W P. However, Broadstone Net Lease is 1.01 times less risky than W P. It trades about -0.05 of its potential returns per unit of risk. W P Carey is currently generating about -0.07 per unit of risk. If you would invest  1,808  in Broadstone Net Lease on September 3, 2024 and sell it today you would lose (57.00) from holding Broadstone Net Lease or give up 3.15% of portfolio value over 90 days.

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

Broadstone Net Lease  vs.  W P Carey

Broadstone Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadstone Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Broadstone Net is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

W P Carey

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Broadstone Net and W P

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

The idea behind Broadstone Net Lease and W P Carey 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.