Correlation Between CTO Realty and Presidio Property

Can any of the company-specific risk be diversified away by investing in both CTO Realty and Presidio Property 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 Presidio Property 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 Presidio Property Trust, you can compare the effects of market volatilities on CTO Realty and Presidio Property 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 Presidio Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTO Realty and Presidio Property.

Diversification Opportunities for CTO Realty and Presidio Property

-0.62

Correlation Coefficient

CTO Realty  Presidio Property

Excellent diversification

The 3 months correlation between CTO and Presidio is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding CTO Realty Growth and Presidio Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Presidio Property Trust 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 Presidio Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Presidio Property Trust has no effect on the direction of CTO Realty i.e., CTO Realty and Presidio Property go up and down completely randomly.

Pair Corralation between CTO Realty and Presidio Property

Assuming the 90 days trading horizon CTO Realty Growth is expected to under-perform the Presidio Property. But the preferred stock apears to be less risky and, when comparing its historical volatility, CTO Realty Growth is 1.1 times less risky than Presidio Property. The preferred stock trades about -0.04 of its potential returns per unit of risk. The Presidio Property Trust is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,376  in Presidio Property Trust on December 29, 2024 and sell it today you would earn a total of  92.00  from holding Presidio Property Trust or generate 6.69% return on investment over 90 days.

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

CTO Realty Growth  vs.  Presidio Property Trust

CTO Realty Growth

Risk-Adjusted Performance

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.

Presidio Property Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Presidio Property Trust are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Presidio Property may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CTO Realty and Presidio Property

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

The idea behind CTO Realty Growth and Presidio Property Trust 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.