Correlation Between CTO Realty and American Assets

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

Diversification Opportunities for CTO Realty and American Assets

0.18

Correlation Coefficient

CTO Realty  American Assets

Average diversification

The 3 months correlation between CTO and American is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding CTO Realty Growth and American Assets Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Assets 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 American Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Assets Trust has no effect on the direction of CTO Realty i.e., CTO Realty and American Assets go up and down completely randomly.

Pair Corralation between CTO Realty and American Assets

Considering the 90-day investment horizon CTO Realty Growth is expected to generate 0.82 times more return on investment than American Assets. However, CTO Realty Growth is 1.23 times less risky than American Assets. It trades about 0.0 of its potential returns per unit of risk. American Assets Trust is currently generating about -0.21 per unit of risk. If you would invest  1,924  in CTO Realty Growth on December 28, 2024 and sell it today you would lose (15.00) from holding CTO Realty Growth or give up 0.78% of portfolio value over 90 days.

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

CTO Realty Growth  vs.  American Assets Trust

CTO Realty Growth

Risk-Adjusted Performance

Weak

Over the last 90 days CTO Realty Growth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, CTO Realty is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

American Assets Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Assets Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CTO Realty and American Assets

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

The idea behind CTO Realty Growth and American Assets 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.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.