Correlation Between Highlands REIT and Global Net

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

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

Diversification Opportunities for Highlands REIT and Global Net

0.14

Correlation Coefficient

Highlands REIT  Global Net

Average diversification

The 3 months correlation between Highlands and Global is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Highlands REIT and Global Net Lease, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease, and Highlands REIT 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 Highlands REIT are associated (or correlated) with Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease, has no effect on the direction of Highlands REIT i.e., Highlands REIT and Global Net go up and down completely randomly.

Pair Corralation between Highlands REIT and Global Net

Given the investment horizon of 90 days Highlands REIT is expected to generate 91.54 times more return on investment than Global Net. However, Highlands REIT is 91.54 times more volatile than Global Net Lease,. It trades about 0.24 of its potential returns per unit of risk. Global Net Lease, is currently generating about -0.17 per unit of risk. If you would invest  8.51  in Highlands REIT on September 5, 2024 and sell it today you would lose (4.51) from holding Highlands REIT or give up 53.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Highlands REIT  vs.  Global Net Lease,

Highlands REIT

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Highlands REIT are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent fundamental indicators, Highlands REIT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Global Net Lease,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Net Lease, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Highlands REIT and Global Net

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

The idea behind Highlands REIT and Global Net Lease, 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.