Correlation Between GEAR4MUSIC and National Retail

Can any of the company-specific risk be diversified away by investing in both GEAR4MUSIC and National Retail 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 GEAR4MUSIC and National Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GEAR4MUSIC LS 10 and National Retail Properties, you can compare the effects of market volatilities on GEAR4MUSIC and National Retail 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 GEAR4MUSIC with a short position of National Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEAR4MUSIC and National Retail.

Diversification Opportunities for GEAR4MUSIC and National Retail

0.41

Correlation Coefficient

GEAR4MUSIC  National Retail

Very weak diversification

The 3 months correlation between GEAR4MUSIC and National is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding GEAR4MUSIC LS 10 and National Retail Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Retail Prop and GEAR4MUSIC 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 GEAR4MUSIC LS 10 are associated (or correlated) with National Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Retail Prop has no effect on the direction of GEAR4MUSIC i.e., GEAR4MUSIC and National Retail go up and down completely randomly.

Pair Corralation between GEAR4MUSIC and National Retail

Assuming the 90 days horizon GEAR4MUSIC LS 10 is expected to under-perform the National Retail. In addition to that, GEAR4MUSIC is 2.98 times more volatile than National Retail Properties. It trades about -0.2 of its total potential returns per unit of risk. National Retail Properties is currently generating about -0.16 per unit of volatility. If you would invest  3,918  in National Retail Properties on October 26, 2024 and sell it today you would lose (147.00) from holding National Retail Properties or give up 3.75% of portfolio value over 90 days.

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

GEAR4MUSIC LS 10  vs.  National Retail Properties

GEAR4MUSIC LS 10

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEAR4MUSIC LS 10 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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.

National Retail Prop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Retail Properties 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.

Pair Trading with GEAR4MUSIC and National Retail

The main advantage of trading using opposite GEAR4MUSIC and National Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEAR4MUSIC position performs unexpectedly, National Retail 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 National Retail will offset losses from the drop in National Retail's long position.

The idea behind GEAR4MUSIC LS 10 and National Retail Properties 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.