Correlation Between Four Corners and Newlake Capital

Can any of the company-specific risk be diversified away by investing in both Four Corners and Newlake Capital 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 Four Corners and Newlake Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Four Corners Property and Newlake Capital Partners, you can compare the effects of market volatilities on Four Corners and Newlake Capital 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 Four Corners with a short position of Newlake Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Four Corners and Newlake Capital.

Diversification Opportunities for Four Corners and Newlake Capital

0.54

Correlation Coefficient

Four Corners  Newlake Capital

Very weak diversification

The 3 months correlation between Four and Newlake is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Four Corners Property and Newlake Capital Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newlake Capital Partners and Four Corners 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 Four Corners Property are associated (or correlated) with Newlake Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newlake Capital Partners has no effect on the direction of Four Corners i.e., Four Corners and Newlake Capital go up and down completely randomly.

Pair Corralation between Four Corners and Newlake Capital

Given the investment horizon of 90 days Four Corners is expected to generate 3.61 times less return on investment than Newlake Capital. But when comparing it to its historical volatility, Four Corners Property is 1.51 times less risky than Newlake Capital. It trades about 0.01 of its potential returns per unit of risk. Newlake Capital Partners is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,419  in Newlake Capital Partners on October 13, 2024 and sell it today you would earn a total of  282.00  from holding Newlake Capital Partners or generate 19.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Four Corners Property  vs.  Newlake Capital Partners

Four Corners Property

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Four Corners Property 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 stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Newlake Capital Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newlake Capital Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest fragile performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Four Corners and Newlake Capital

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

The idea behind Four Corners Property and Newlake Capital Partners 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.