Correlation Between Inventrust Properties and Realty Income

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

By analyzing existing cross correlation between Inventrust Properties Corp and Realty Income, you can compare the effects of market volatilities on Inventrust Properties and Realty Income 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 Inventrust Properties with a short position of Realty Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inventrust Properties and Realty Income.

Diversification Opportunities for Inventrust Properties and Realty Income

-0.62

Correlation Coefficient

Inventrust Properties  Realty Income

Excellent diversification

The 3 months correlation between Inventrust and Realty is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Inventrust Properties Corp and Realty Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realty Income and Inventrust Properties 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 Inventrust Properties Corp are associated (or correlated) with Realty Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realty Income has no effect on the direction of Inventrust Properties i.e., Inventrust Properties and Realty Income go up and down completely randomly.

Pair Corralation between Inventrust Properties and Realty Income

Considering the 90-day investment horizon Inventrust Properties Corp is expected to generate 1.09 times more return on investment than Realty Income. However, Inventrust Properties is 1.09 times more volatile than Realty Income. It trades about 0.14 of its potential returns per unit of risk. Realty Income is currently generating about 0.03 per unit of risk. If you would invest  2,425  in Inventrust Properties Corp on September 29, 2024 and sell it today you would earn a total of  543.00  from holding Inventrust Properties Corp or generate 22.39% return on investment over 90 days.

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

Inventrust Properties Corp  vs.  Realty Income

Inventrust Properties

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Inventrust Properties Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Inventrust Properties is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Realty Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Realty Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Inventrust Properties and Realty Income

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

The idea behind Inventrust Properties Corp and Realty Income 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.