Correlation Between CareTrust REIT and CKX Lands

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

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

Diversification Opportunities for CareTrust REIT and CKX Lands

0.44

Correlation Coefficient

CareTrust REIT  CKX Lands

Very weak diversification

The 3 months correlation between CareTrust and CKX is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding CareTrust REIT and CKX Lands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CKX Lands and CareTrust REIT 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 CareTrust REIT are associated (or correlated) with CKX Lands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CKX Lands has no effect on the direction of CareTrust REIT i.e., CareTrust REIT and CKX Lands go up and down completely randomly.

Pair Corralation between CareTrust REIT and CKX Lands

Given the investment horizon of 90 days CareTrust REIT is expected to under-perform the CKX Lands. But the stock apears to be less risky and, when comparing its historical volatility, CareTrust REIT is 1.21 times less risky than CKX Lands. The stock trades about -0.19 of its potential returns per unit of risk. The CKX Lands is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,302  in CKX Lands on September 27, 2024 and sell it today you would lose (37.00) from holding CKX Lands or give up 2.84% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.35%
Values	Daily Returns

CareTrust REIT  vs.  CKX Lands

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.

CKX Lands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CKX Lands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with CareTrust REIT and CKX Lands

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

The idea behind CareTrust REIT and CKX Lands 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.