Correlation Between Rithm Property and Power REIT

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

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

Diversification Opportunities for Rithm Property and Power REIT

-0.09

Correlation Coefficient

Rithm Property  Power REIT

Good diversification

The 3 months correlation between Rithm and Power is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Rithm Property Trust and Power REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power REIT and Rithm Property 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 Rithm Property Trust 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 Rithm Property i.e., Rithm Property and Power REIT go up and down completely randomly.

Pair Corralation between Rithm Property and Power REIT

Considering the 90-day investment horizon Rithm Property Trust is expected to under-perform the Power REIT. But the stock apears to be less risky and, when comparing its historical volatility, Rithm Property Trust is 3.59 times less risky than Power REIT. The stock trades about -0.05 of its potential returns per unit of risk. The Power REIT is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  486.00  in Power REIT on October 7, 2024 and sell it today you would lose (356.00) from holding Power REIT or give up 73.25% of portfolio value over 90 days.

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

Rithm Property Trust  vs.  Power REIT

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 comparatively stable basic indicators, Rithm Property is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Power REIT

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Power REIT are ranked lower than 1 (%) 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.

Pair Trading with Rithm Property and Power REIT

The main advantage of trading using opposite Rithm Property and Power REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rithm Property 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 Rithm Property Trust 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.