Correlation Between Spirit Realty and Safehold

Can any of the company-specific risk be diversified away by investing in both Spirit Realty and Safehold 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 Safehold 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 Safehold, you can compare the effects of market volatilities on Spirit Realty and Safehold 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 Safehold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirit Realty and Safehold.

Diversification Opportunities for Spirit Realty and Safehold

0.0

Correlation Coefficient

Spirit Realty  Safehold

Pay attention - limited upside

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

Pair Corralation between Spirit Realty and Safehold

If you would invest  1,834  in Safehold on December 29, 2024 and sell it today you would lose (24.00) from holding Safehold or give up 1.31% of portfolio value over 90 days.

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

Spirit Realty Capital  vs.  Safehold

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.

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 rather sound technical and fundamental indicators, Safehold is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Spirit Realty and Safehold

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

The idea behind Spirit Realty Capital and Safehold 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.