Correlation Between CTO Realty and Modiv

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

Diversification Opportunities for CTO Realty and Modiv

-0.27

Correlation Coefficient

CTO Realty  Modiv

Very good diversification

The 3 months correlation between CTO and Modiv is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding CTO Realty Growth and Modiv Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modiv Inc 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 Modiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modiv Inc has no effect on the direction of CTO Realty i.e., CTO Realty and Modiv go up and down completely randomly.

Pair Corralation between CTO Realty and Modiv

Considering the 90-day investment horizon CTO Realty Growth is expected to under-perform the Modiv. In addition to that, CTO Realty is 4.14 times more volatile than Modiv Inc. It trades about -0.12 of its total potential returns per unit of risk. Modiv Inc is currently generating about -0.11 per unit of volatility. If you would invest  2,390  in Modiv Inc on November 28, 2024 and sell it today you would lose (22.00) from holding Modiv Inc or give up 0.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

CTO Realty Growth  vs.  Modiv Inc

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. 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.

Modiv Inc

Risk-Adjusted Performance

Very Weak

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

Pair Trading with CTO Realty and Modiv

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

The idea behind CTO Realty Growth and Modiv Inc 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..