Correlation Between Safehold and Generation Income

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

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

Diversification Opportunities for Safehold and Generation Income

0.44

Correlation Coefficient

Safehold  Generation Income

Very weak diversification

The 3 months correlation between Safehold and Generation is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Safehold and Generation Income Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generation Income and Safehold 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 Safehold are associated (or correlated) with Generation Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generation Income has no effect on the direction of Safehold i.e., Safehold and Generation Income go up and down completely randomly.

Pair Corralation between Safehold and Generation Income

Given the investment horizon of 90 days Safehold is expected to under-perform the Generation Income. But the stock apears to be less risky and, when comparing its historical volatility, Safehold is 19.18 times less risky than Generation Income. The stock trades about -0.09 of its potential returns per unit of risk. The Generation Income Properties is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Generation Income Properties on November 29, 2024 and sell it today you would earn a total of  42.57  from holding Generation Income Properties or generate 250.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	31.67%
Values	Daily Returns

Safehold  vs.  Generation Income Properties

Safehold

Risk-Adjusted Performance

Very Weak

Over the last 90 days Safehold has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Generation Income

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Generation Income Properties are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Generation Income showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Safehold and Generation Income

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

The idea behind Safehold and Generation Income Properties 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.