Correlation Between Realty Income and American Assets

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

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

Diversification Opportunities for Realty Income and American Assets

0.0

Correlation Coefficient

Realty Income  American Assets

Pay attention - limited upside

The 3 months correlation between Realty and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income and American Assets Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Assets Trust and Realty Income 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 Realty Income are associated (or correlated) with American Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Assets Trust has no effect on the direction of Realty Income i.e., Realty Income and American Assets go up and down completely randomly.

Pair Corralation between Realty Income and American Assets

Taking into account the 90-day investment horizon Realty Income is expected to under-perform the American Assets. But the stock apears to be less risky and, when comparing its historical volatility, Realty Income is 1.64 times less risky than American Assets. The stock trades about -0.01 of its potential returns per unit of risk. The American Assets Trust is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,463  in American Assets Trust on October 3, 2024 and sell it today you would earn a total of  163.00  from holding American Assets Trust or generate 6.62% return on investment over 90 days.

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

Realty Income  vs.  American Assets Trust

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.

American Assets Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in American Assets Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, American Assets is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Realty Income and American Assets

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

The idea behind Realty Income and American Assets 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.