Correlation Between Spirit Realty and CTO Realty

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

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

Diversification Opportunities for Spirit Realty and CTO Realty

0.0

Correlation Coefficient

Spirit Realty  CTO Realty

Pay attention - limited upside

The 3 months correlation between Spirit and CTO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Spirit Realty Capital and CTO Realty Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTO Realty Growth and Spirit Realty 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 Spirit Realty Capital are associated (or correlated) with CTO Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTO Realty Growth has no effect on the direction of Spirit Realty i.e., Spirit Realty and CTO Realty go up and down completely randomly.

Pair Corralation between Spirit Realty and CTO Realty

If you would invest  1,901  in CTO Realty Growth on December 27, 2024 and sell it today you would earn a total of  8.00  from holding CTO Realty Growth or generate 0.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Spirit Realty Capital  vs.  CTO Realty Growth

Spirit Realty Capital

Risk-Adjusted Performance

Very Weak

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

CTO Realty Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days CTO Realty Growth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, CTO Realty is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Spirit Realty and CTO Realty

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

The idea behind Spirit Realty Capital and CTO Realty Growth 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.