Correlation Between Outfront Media and Power REIT

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

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

Diversification Opportunities for Outfront Media and Power REIT

0.18

Correlation Coefficient

Outfront Media  Power REIT

Average diversification

The 3 months correlation between Outfront and Power is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Outfront Media and Power REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power REIT and Outfront Media 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 Outfront Media 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 Outfront Media i.e., Outfront Media and Power REIT go up and down completely randomly.

Pair Corralation between Outfront Media and Power REIT

Considering the 90-day investment horizon Outfront Media is expected to under-perform the Power REIT. But the stock apears to be less risky and, when comparing its historical volatility, Outfront Media is 2.37 times less risky than Power REIT. The stock trades about -0.04 of its potential returns per unit of risk. The Power REIT is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  126.00  in Power REIT on December 28, 2024 and sell it today you would lose (8.00) from holding Power REIT or give up 6.35% of portfolio value over 90 days.

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

Outfront Media  vs.  Power REIT

Outfront Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days Outfront Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Outfront Media is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private 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 fairly stable basic indicators, Power REIT is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Outfront Media and Power REIT

The main advantage of trading using opposite Outfront Media and Power REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Outfront Media 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 Outfront Media 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.