Correlation Between Fibra UNO and Essential Properties

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

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

Diversification Opportunities for Fibra UNO and Essential Properties

-0.18

Correlation Coefficient

Fibra UNO  Essential Properties

Good diversification

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

Pair Corralation between Fibra UNO and Essential Properties

Assuming the 90 days horizon Fibra UNO is expected to under-perform the Essential Properties. In addition to that, Fibra UNO is 2.25 times more volatile than Essential Properties Realty. It trades about -0.06 of its total potential returns per unit of risk. Essential Properties Realty is currently generating about 0.01 per unit of volatility. If you would invest  3,253  in Essential Properties Realty on September 13, 2024 and sell it today you would earn a total of  17.00  from holding Essential Properties Realty or generate 0.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Fibra UNO  vs.  Essential Properties Realty

Fibra UNO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fibra UNO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Essential Properties

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Essential Properties Realty are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with Fibra UNO and Essential Properties

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

The idea behind Fibra UNO and Essential Properties Realty 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.