Correlation Between Farmland Partners and Outfront Media

Can any of the company-specific risk be diversified away by investing in both Farmland Partners and Outfront Media 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 Farmland Partners and Outfront Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Farmland Partners and Outfront Media

0.76

Correlation Coefficient

Farmland Partners  Outfront Media

Poor diversification

The 3 months correlation between Farmland and Outfront is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Farmland Partners and Outfront Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Outfront Media and Farmland Partners 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 Farmland Partners are associated (or correlated) with Outfront Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Outfront Media has no effect on the direction of Farmland Partners i.e., Farmland Partners and Outfront Media go up and down completely randomly.

Pair Corralation between Farmland Partners and Outfront Media

Considering the 90-day investment horizon Farmland Partners is expected to generate 0.78 times more return on investment than Outfront Media. However, Farmland Partners is 1.28 times less risky than Outfront Media. It trades about -0.03 of its potential returns per unit of risk. Outfront Media is currently generating about -0.05 per unit of risk. If you would invest  1,161  in Farmland Partners on December 29, 2024 and sell it today you would lose (44.00) from holding Farmland Partners or give up 3.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Farmland Partners  vs.  Outfront Media

Farmland Partners

Risk-Adjusted Performance

Very Weak

Over the last 90 days Farmland Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Farmland Partners is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Outfront Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days Outfront Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent 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.

Pair Trading with Farmland Partners and Outfront Media

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

The idea behind Farmland Partners and Outfront Media 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..