Correlation Between National Retail and Americold Realty

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

By analyzing existing cross correlation between National Retail Properties and Americold Realty Trust, you can compare the effects of market volatilities on National Retail and Americold 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 National Retail with a short position of Americold Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and Americold Realty.

Diversification Opportunities for National Retail and Americold Realty

0.8

Correlation Coefficient

National Retail  Americold Realty

Very poor diversification

The 3 months correlation between National and Americold is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and Americold Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Americold Realty Trust and National Retail 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 National Retail Properties are associated (or correlated) with Americold Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Americold Realty Trust has no effect on the direction of National Retail i.e., National Retail and Americold Realty go up and down completely randomly.

Pair Corralation between National Retail and Americold Realty

Considering the 90-day investment horizon National Retail Properties is expected to under-perform the Americold Realty. But the stock apears to be less risky and, when comparing its historical volatility, National Retail Properties is 1.19 times less risky than Americold Realty. The stock trades about -0.02 of its potential returns per unit of risk. The Americold Realty Trust is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,361  in Americold Realty Trust on November 29, 2024 and sell it today you would lose (56.00) from holding Americold Realty Trust or give up 2.37% of portfolio value over 90 days.

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

National Retail Properties  vs.  Americold Realty Trust

National Retail Prop

Risk-Adjusted Performance

Very Weak

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

Americold Realty Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Americold Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Americold Realty is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with National Retail and Americold Realty

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

The idea behind National Retail Properties and Americold Realty Trust 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.