Correlation Between La Rosa and Realty Income

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

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

Diversification Opportunities for La Rosa and Realty Income

-0.36

Correlation Coefficient

La Rosa  Realty Income

Very good diversification

The 3 months correlation between LRHC and Realty is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding La Rosa Holdings and Realty Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realty Income and La Rosa 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 La Rosa Holdings 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 La Rosa i.e., La Rosa and Realty Income go up and down completely randomly.

Pair Corralation between La Rosa and Realty Income

Given the investment horizon of 90 days La Rosa Holdings is expected to generate 5.02 times more return on investment than Realty Income. However, La Rosa is 5.02 times more volatile than Realty Income. It trades about 0.12 of its potential returns per unit of risk. Realty Income is currently generating about -0.28 per unit of risk. If you would invest  68.00  in La Rosa Holdings on October 10, 2024 and sell it today you would earn a total of  8.00  from holding La Rosa Holdings or generate 11.76% return on investment over 90 days.

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

La Rosa Holdings  vs.  Realty Income

La Rosa Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in La Rosa Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting technical indicators, La Rosa exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with La Rosa and Realty Income

The main advantage of trading using opposite La Rosa and Realty Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if La Rosa 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 La Rosa Holdings 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.

Check out your portfolio center.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.