Correlation Between Global Net and Medalist Diversified

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

By analyzing existing cross correlation between Global Net Lease and Medalist Diversified Reit, you can compare the effects of market volatilities on Global Net and Medalist Diversified 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 Global Net with a short position of Medalist Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Net and Medalist Diversified.

Diversification Opportunities for Global Net and Medalist Diversified

-0.15

Correlation Coefficient

Global Net  Medalist Diversified

Good diversification

The 3 months correlation between Global and Medalist is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Global Net Lease and Medalist Diversified Reit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medalist Diversified Reit and Global Net 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 Global Net Lease are associated (or correlated) with Medalist Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medalist Diversified Reit has no effect on the direction of Global Net i.e., Global Net and Medalist Diversified go up and down completely randomly.

Pair Corralation between Global Net and Medalist Diversified

Assuming the 90 days trading horizon Global Net Lease is expected to generate 0.53 times more return on investment than Medalist Diversified. However, Global Net Lease is 1.9 times less risky than Medalist Diversified. It trades about 0.06 of its potential returns per unit of risk. Medalist Diversified Reit is currently generating about -0.03 per unit of risk. If you would invest  2,092  in Global Net Lease on December 21, 2024 and sell it today you would earn a total of  81.00  from holding Global Net Lease or generate 3.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.92%
Values	Daily Returns

Global Net Lease  vs.  Medalist Diversified Reit

Global Net Lease

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global Net Lease are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Global Net is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Medalist Diversified Reit

Risk-Adjusted Performance

Very Weak

Over the last 90 days Medalist Diversified Reit has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Medalist Diversified is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Global Net and Medalist Diversified

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

The idea behind Global Net Lease and Medalist Diversified Reit 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .