Correlation Between Modiv and Medalist Diversified

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

By analyzing existing cross correlation between Modiv Inc and Medalist Diversified Reit, you can compare the effects of market volatilities on Modiv and Medalist Diversified 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 Modiv with a short position of Medalist Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modiv and Medalist Diversified.

Diversification Opportunities for Modiv and Medalist Diversified

0.25

Correlation Coefficient

Modiv  Medalist Diversified

Modest diversification

The 3 months correlation between Modiv and Medalist is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Modiv Inc and Medalist Diversified Reit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medalist Diversified Reit and Modiv 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 Modiv Inc are associated (or correlated) with Medalist Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medalist Diversified Reit has no effect on the direction of Modiv i.e., Modiv and Medalist Diversified go up and down completely randomly.

Pair Corralation between Modiv and Medalist Diversified

Assuming the 90 days trading horizon Modiv Inc is expected to generate 0.32 times more return on investment than Medalist Diversified. However, Modiv Inc is 3.13 times less risky than Medalist Diversified. It trades about 0.05 of its potential returns per unit of risk. Medalist Diversified Reit is currently generating about -0.01 per unit of risk. If you would invest  2,405  in Modiv Inc on December 30, 2024 and sell it today you would earn a total of  42.00  from holding Modiv Inc or generate 1.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.55%
Values	Daily Returns

Modiv Inc  vs.  Medalist Diversified Reit

Modiv Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Modiv Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Modiv is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Medalist Diversified Reit

Risk-Adjusted Performance

Very Weak

Over the last 90 days Medalist Diversified Reit has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Medalist Diversified is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Modiv and Medalist Diversified

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

The idea behind Modiv Inc and Medalist Diversified 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.