Correlation Between Link Real and AGREE RLTY

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

By analyzing existing cross correlation between Link Real Estate and AGREE RLTY P, you can compare the effects of market volatilities on Link Real and AGREE RLTY 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 Link Real with a short position of AGREE RLTY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Link Real and AGREE RLTY.

Diversification Opportunities for Link Real and AGREE RLTY

0.1

Correlation Coefficient

Link Real  AGREE RLTY

Average diversification

The 3 months correlation between Link and AGREE is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Link Real Estate and AGREE RLTY P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGREE RLTY P and Link Real 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 Link Real Estate are associated (or correlated) with AGREE RLTY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGREE RLTY P has no effect on the direction of Link Real i.e., Link Real and AGREE RLTY go up and down completely randomly.

Pair Corralation between Link Real and AGREE RLTY

Assuming the 90 days horizon Link Real Estate is expected to generate 1.49 times more return on investment than AGREE RLTY. However, Link Real is 1.49 times more volatile than AGREE RLTY P. It trades about 0.33 of its potential returns per unit of risk. AGREE RLTY P is currently generating about -0.02 per unit of risk. If you would invest  390.00  in Link Real Estate on November 29, 2024 and sell it today you would earn a total of  43.00  from holding Link Real Estate or generate 11.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Link Real Estate  vs.  AGREE RLTY P

Link Real Estate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Link Real Estate are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Link Real is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

AGREE RLTY P

Risk-Adjusted Performance

Very Weak

Over the last 90 days AGREE RLTY P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AGREE RLTY is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Link Real and AGREE RLTY

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

The idea behind Link Real Estate and AGREE RLTY P 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.