Correlation Between Modiv and CTO Realty

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

By analyzing existing cross correlation between Modiv Inc and CTO Realty Growth, you can compare the effects of market volatilities on Modiv and CTO Realty 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 CTO Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modiv and CTO Realty.

Diversification Opportunities for Modiv and CTO Realty

-0.09

Correlation Coefficient

Modiv  CTO Realty

Good diversification

The 3 months correlation between Modiv and CTO is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Modiv Inc and CTO Realty Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTO Realty Growth 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 CTO Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTO Realty Growth has no effect on the direction of Modiv i.e., Modiv and CTO Realty go up and down completely randomly.

Pair Corralation between Modiv and CTO Realty

Considering the 90-day investment horizon Modiv Inc is expected to generate 1.4 times more return on investment than CTO Realty. However, Modiv is 1.4 times more volatile than CTO Realty Growth. It trades about 0.06 of its potential returns per unit of risk. CTO Realty Growth is currently generating about 0.0 per unit of risk. If you would invest  1,490  in Modiv Inc on December 26, 2024 and sell it today you would earn a total of  101.50  from holding Modiv Inc or generate 6.81% return on investment over 90 days.

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

Modiv Inc  vs.  CTO Realty Growth

Modiv Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Modiv Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain fundamental indicators, Modiv may actually be approaching a critical reversion point that can send shares even higher in April 2025.

CTO Realty Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days CTO Realty Growth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, CTO Realty is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Modiv and CTO Realty

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

The idea behind Modiv Inc and CTO Realty Growth 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.