Correlation Between Retail Opportunity and Agree Realty

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

By analyzing existing cross correlation between Retail Opportunity Investments and Agree Realty, you can compare the effects of market volatilities on Retail Opportunity and Agree 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 Retail Opportunity with a short position of Agree Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Opportunity and Agree Realty.

Diversification Opportunities for Retail Opportunity and Agree Realty

0.88

Correlation Coefficient

Retail Opportunity  Agree Realty

Very poor diversification

The 3 months correlation between Retail and Agree is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Retail Opportunity Investments and Agree Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agree Realty and Retail Opportunity 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 Retail Opportunity Investments are associated (or correlated) with Agree Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agree Realty has no effect on the direction of Retail Opportunity i.e., Retail Opportunity and Agree Realty go up and down completely randomly.

Pair Corralation between Retail Opportunity and Agree Realty

Given the investment horizon of 90 days Retail Opportunity is expected to generate 8.17 times less return on investment than Agree Realty. But when comparing it to its historical volatility, Retail Opportunity Investments is 8.55 times less risky than Agree Realty. It trades about 0.15 of its potential returns per unit of risk. Agree Realty is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  6,918  in Agree Realty on December 28, 2024 and sell it today you would earn a total of  710.00  from holding Agree Realty or generate 10.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	50.82%
Values	Daily Returns

Retail Opportunity Investments  vs.  Agree Realty

Retail Opportunity

Risk-Adjusted Performance

Good

Over the last 90 days Retail Opportunity Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Retail Opportunity is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Agree Realty

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agree Realty are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Agree Realty may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Retail Opportunity and Agree Realty

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

The idea behind Retail Opportunity Investments and Agree Realty 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.