Correlation Between Essential Properties and British Land

Can any of the company-specific risk be diversified away by investing in both Essential Properties and British Land 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 Essential Properties and British Land into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Essential Properties Realty and British Land, you can compare the effects of market volatilities on Essential Properties and British Land 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 Essential Properties with a short position of British Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essential Properties and British Land.

Diversification Opportunities for Essential Properties and British Land

0.0

Correlation Coefficient

Essential Properties  British Land

Pay attention - limited upside

The 3 months correlation between Essential and British is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Essential Properties Realty and British Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British Land and Essential Properties 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 Essential Properties Realty are associated (or correlated) with British Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British Land has no effect on the direction of Essential Properties i.e., Essential Properties and British Land go up and down completely randomly.

Pair Corralation between Essential Properties and British Land

If you would invest  2,221  in Essential Properties Realty on December 2, 2024 and sell it today you would earn a total of  1,051  from holding Essential Properties Realty or generate 47.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Essential Properties Realty  vs.  British Land

Essential Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Essential Properties Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Essential Properties is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

British Land

Risk-Adjusted Performance

Very Weak

Over the last 90 days British Land has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, British Land is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Essential Properties and British Land

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

The idea behind Essential Properties Realty and British Land 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.