Correlation Between Lead Real and CareTrust REIT

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

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

Diversification Opportunities for Lead Real and CareTrust REIT

-0.03

Correlation Coefficient

Lead Real  CareTrust REIT

Good diversification

The 3 months correlation between Lead and CareTrust is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Lead Real Estate and CareTrust REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareTrust REIT and Lead 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 Lead Real Estate are associated (or correlated) with CareTrust REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareTrust REIT has no effect on the direction of Lead Real i.e., Lead Real and CareTrust REIT go up and down completely randomly.

Pair Corralation between Lead Real and CareTrust REIT

Considering the 90-day investment horizon Lead Real Estate is expected to generate 4.84 times more return on investment than CareTrust REIT. However, Lead Real is 4.84 times more volatile than CareTrust REIT. It trades about 0.07 of its potential returns per unit of risk. CareTrust REIT is currently generating about -0.13 per unit of risk. If you would invest  164.00  in Lead Real Estate on October 13, 2024 and sell it today you would earn a total of  30.00  from holding Lead Real Estate or generate 18.29% return on investment over 90 days.

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

Lead Real Estate  vs.  CareTrust REIT

Lead Real Estate

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lead Real Estate are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Lead Real exhibited solid returns over the last few months and may actually be approaching a breakup point.

CareTrust REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CareTrust REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Lead Real and CareTrust REIT

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

The idea behind Lead Real Estate and CareTrust 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.