Correlation Between Modiv and HR Real

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

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

Diversification Opportunities for Modiv and HR Real

0.68

Correlation Coefficient

Modiv  HR Real

Poor diversification

The 3 months correlation between Modiv and HRUFF is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Modiv Inc and HR Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HR Real Estate 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 HR Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HR Real Estate has no effect on the direction of Modiv i.e., Modiv and HR Real go up and down completely randomly.

Pair Corralation between Modiv and HR Real

Considering the 90-day investment horizon Modiv Inc is expected to under-perform the HR Real. But the stock apears to be less risky and, when comparing its historical volatility, Modiv Inc is 1.26 times less risky than HR Real. The stock trades about -0.04 of its potential returns per unit of risk. The HR Real Estate is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  676.00  in HR Real Estate on December 2, 2024 and sell it today you would earn a total of  22.00  from holding HR Real Estate or generate 3.25% return on investment over 90 days.

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

Modiv Inc  vs.  HR Real Estate

Modiv Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Modiv Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, Modiv is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

HR Real Estate

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HR Real Estate are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, HR Real is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Modiv and HR Real

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

The idea behind Modiv Inc and HR Real Estate 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.