Correlation Between Realty Income and Vastned Retail

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

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

Diversification Opportunities for Realty Income and Vastned Retail

0.49

Correlation Coefficient

Realty Income  Vastned Retail

Very weak diversification

The 3 months correlation between Realty and Vastned is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income and Vastned Retail NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vastned Retail NV and Realty Income 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 Realty Income are associated (or correlated) with Vastned Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vastned Retail NV has no effect on the direction of Realty Income i.e., Realty Income and Vastned Retail go up and down completely randomly.

Pair Corralation between Realty Income and Vastned Retail

Assuming the 90 days horizon Realty Income is expected to under-perform the Vastned Retail. But the stock apears to be less risky and, when comparing its historical volatility, Realty Income is 1.15 times less risky than Vastned Retail. The stock trades about -0.01 of its potential returns per unit of risk. The Vastned Retail NV is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,707  in Vastned Retail NV on October 12, 2024 and sell it today you would earn a total of  453.00  from holding Vastned Retail NV or generate 26.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.8%
Values	Daily Returns

Realty Income  vs.  Vastned Retail NV

Realty Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Realty Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Vastned Retail NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vastned Retail NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vastned Retail is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Realty Income and Vastned Retail

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

The idea behind Realty Income and Vastned Retail NV 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.