Correlation Between One Liberty and CTO Realty

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

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

Diversification Opportunities for One Liberty and CTO Realty

0.04

Correlation Coefficient

One Liberty  CTO Realty

Significant diversification

The 3 months correlation between One and CTO is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding One Liberty Properties and CTO Realty Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTO Realty Growth and One Liberty 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 One Liberty Properties are associated (or correlated) with CTO Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTO Realty Growth has no effect on the direction of One Liberty i.e., One Liberty and CTO Realty go up and down completely randomly.

Pair Corralation between One Liberty and CTO Realty

Considering the 90-day investment horizon One Liberty Properties is expected to under-perform the CTO Realty. But the stock apears to be less risky and, when comparing its historical volatility, One Liberty Properties is 1.07 times less risky than CTO Realty. The stock trades about -0.03 of its potential returns per unit of risk. The CTO Realty Growth is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,919  in CTO Realty Growth on December 26, 2024 and sell it today you would lose (6.00) from holding CTO Realty Growth or give up 0.31% of portfolio value over 90 days.

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

One Liberty Properties  vs.  CTO Realty Growth

One Liberty Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days One Liberty Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, One Liberty is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

CTO Realty Growth

Risk-Adjusted Performance

Very Weak

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

Pair Trading with One Liberty and CTO Realty

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

The idea behind One Liberty Properties and CTO Realty Growth 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.