Correlation Between CBL Associates and CareTrust REIT

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

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

Diversification Opportunities for CBL Associates and CareTrust REIT

-0.66

Correlation Coefficient

CBL Associates  CareTrust REIT

Excellent diversification

The 3 months correlation between CBL and CareTrust is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding CBL Associates Properties and CareTrust REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareTrust REIT and CBL Associates 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 CBL Associates Properties are associated (or correlated) with CareTrust REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareTrust REIT has no effect on the direction of CBL Associates i.e., CBL Associates and CareTrust REIT go up and down completely randomly.

Pair Corralation between CBL Associates and CareTrust REIT

Considering the 90-day investment horizon CBL Associates Properties is expected to generate 1.28 times more return on investment than CareTrust REIT. However, CBL Associates is 1.28 times more volatile than CareTrust REIT. It trades about -0.17 of its potential returns per unit of risk. CareTrust REIT is currently generating about -0.24 per unit of risk. If you would invest  3,120  in CBL Associates Properties on October 4, 2024 and sell it today you would lose (179.00) from holding CBL Associates Properties or give up 5.74% of portfolio value over 90 days.

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

CBL Associates Properties  vs.  CareTrust REIT

CBL Associates Properties

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CBL Associates Properties are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental drivers, CBL Associates disclosed solid returns over the last few months and may actually be approaching a breakup point.

CareTrust REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CareTrust REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with CBL Associates and CareTrust REIT

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

The idea behind CBL Associates Properties and CareTrust REIT 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.