Correlation Between One Liberty and Power REIT

Can any of the company-specific risk be diversified away by investing in both One Liberty and Power REIT 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 Power REIT 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 Power REIT, you can compare the effects of market volatilities on One Liberty and Power REIT 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 Power REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of One Liberty and Power REIT.

Diversification Opportunities for One Liberty and Power REIT

-0.05

Correlation Coefficient

One Liberty  Power REIT

Good diversification

The 3 months correlation between One and Power is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding One Liberty Properties and Power REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power REIT 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 Power REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power REIT has no effect on the direction of One Liberty i.e., One Liberty and Power REIT go up and down completely randomly.

Pair Corralation between One Liberty and Power REIT

Considering the 90-day investment horizon One Liberty is expected to generate 4.1 times less return on investment than Power REIT. But when comparing it to its historical volatility, One Liberty Properties is 3.38 times less risky than Power REIT. It trades about 0.06 of its potential returns per unit of risk. Power REIT is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  111.00  in Power REIT on December 26, 2024 and sell it today you would earn a total of  6.00  from holding Power REIT or generate 5.41% return on investment over 90 days.

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

One Liberty Properties  vs.  Power REIT

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.

Power REIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days Power REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with One Liberty and Power REIT

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

The idea behind One Liberty Properties and Power REIT 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.