Correlation Between Realty Income and Acadia Realty

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

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

Diversification Opportunities for Realty Income and Acadia Realty

-0.52

Correlation Coefficient

Realty Income  Acadia Realty

Excellent diversification

The 3 months correlation between Realty and Acadia is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income and Acadia Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acadia Realty 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 Acadia Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acadia Realty Trust has no effect on the direction of Realty Income i.e., Realty Income and Acadia Realty go up and down completely randomly.

Pair Corralation between Realty Income and Acadia Realty

Taking into account the 90-day investment horizon Realty Income is expected to generate 0.73 times more return on investment than Acadia Realty. However, Realty Income is 1.37 times less risky than Acadia Realty. It trades about 0.11 of its potential returns per unit of risk. Acadia Realty Trust is currently generating about -0.11 per unit of risk. If you would invest  5,190  in Realty Income on December 27, 2024 and sell it today you would earn a total of  426.00  from holding Realty Income or generate 8.21% return on investment over 90 days.

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

Realty Income  vs.  Acadia Realty Trust

Realty Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Realty Income are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Realty Income may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Acadia Realty Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Acadia Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's forward-looking signals remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Realty Income and Acadia Realty

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

The idea behind Realty Income and Acadia 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.