Correlation Between Realty Income and Belpointe PREP

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

By analyzing existing cross correlation between Realty Income and Belpointe PREP LLC, you can compare the effects of market volatilities on Realty Income and Belpointe PREP 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 Belpointe PREP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and Belpointe PREP.

Diversification Opportunities for Realty Income and Belpointe PREP

-0.39

Correlation Coefficient

Realty Income  Belpointe PREP

Very good diversification

The 3 months correlation between Realty and Belpointe is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income and Belpointe PREP LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Belpointe PREP LLC 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 Belpointe PREP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Belpointe PREP LLC has no effect on the direction of Realty Income i.e., Realty Income and Belpointe PREP go up and down completely randomly.

Pair Corralation between Realty Income and Belpointe PREP

Taking into account the 90-day investment horizon Realty Income is expected to generate 0.38 times more return on investment than Belpointe PREP. However, Realty Income is 2.62 times less risky than Belpointe PREP. It trades about 0.11 of its potential returns per unit of risk. Belpointe PREP LLC is currently generating about -0.08 per unit of risk. If you would invest  5,197  in Realty Income on December 28, 2024 and sell it today you would earn a total of  419.00  from holding Realty Income or generate 8.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Realty Income  vs.  Belpointe PREP LLC

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.

Belpointe PREP LLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Belpointe PREP LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Realty Income and Belpointe PREP

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

The idea behind Realty Income and Belpointe PREP LLC 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.