Correlation Between Power REIT and Rithm Property

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

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

Diversification Opportunities for Power REIT and Rithm Property

-0.09

Correlation Coefficient

Power REIT  Rithm Property

Good diversification

The 3 months correlation between Power and Rithm is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Power REIT and Rithm Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rithm Property Trust and Power REIT 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 Power REIT are associated (or correlated) with Rithm Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rithm Property Trust has no effect on the direction of Power REIT i.e., Power REIT and Rithm Property go up and down completely randomly.

Pair Corralation between Power REIT and Rithm Property

Allowing for the 90-day total investment horizon Power REIT is expected to generate 2.73 times more return on investment than Rithm Property. However, Power REIT is 2.73 times more volatile than Rithm Property Trust. It trades about 0.0 of its potential returns per unit of risk. Rithm Property Trust is currently generating about -0.02 per unit of risk. If you would invest  124.00  in Power REIT on October 22, 2024 and sell it today you would lose (4.00) from holding Power REIT or give up 3.23% of portfolio value over 90 days.

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

Power REIT  vs.  Rithm Property Trust

Power REIT

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Power REIT are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Power REIT showed solid returns over the last few months and may actually be approaching a breakup point.

Rithm Property Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rithm Property Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Power REIT and Rithm Property

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

The idea behind Power REIT and Rithm Property 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.