Correlation Between CTO Realty and Medalist Diversified

Can any of the company-specific risk be diversified away by investing in both CTO Realty and Medalist Diversified 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 CTO Realty and Medalist Diversified into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CTO Realty Growth and Medalist Diversified Reit, you can compare the effects of market volatilities on CTO Realty and Medalist Diversified 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 CTO Realty with a short position of Medalist Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTO Realty and Medalist Diversified.

Diversification Opportunities for CTO Realty and Medalist Diversified

-0.43

Correlation Coefficient

CTO Realty  Medalist Diversified

Very good diversification

The 3 months correlation between CTO and Medalist is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding CTO Realty Growth and Medalist Diversified Reit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medalist Diversified Reit and CTO Realty 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 CTO Realty Growth are associated (or correlated) with Medalist Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medalist Diversified Reit has no effect on the direction of CTO Realty i.e., CTO Realty and Medalist Diversified go up and down completely randomly.

Pair Corralation between CTO Realty and Medalist Diversified

Assuming the 90 days trading horizon CTO Realty Growth is expected to under-perform the Medalist Diversified. But the preferred stock apears to be less risky and, when comparing its historical volatility, CTO Realty Growth is 1.87 times less risky than Medalist Diversified. The preferred stock trades about -0.03 of its potential returns per unit of risk. The Medalist Diversified Reit is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,540  in Medalist Diversified Reit on October 9, 2024 and sell it today you would earn a total of  59.00  from holding Medalist Diversified Reit or generate 2.32% return on investment over 90 days.

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

CTO Realty Growth  vs.  Medalist Diversified Reit

CTO Realty Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTO Realty Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CTO Realty is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Medalist Diversified Reit

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Medalist Diversified Reit are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Medalist Diversified may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CTO Realty and Medalist Diversified

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

The idea behind CTO Realty Growth and Medalist Diversified 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.