Correlation Between VICI Properties and Broadstone Net

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

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

Diversification Opportunities for VICI Properties and Broadstone Net

0.76

Correlation Coefficient

VICI Properties  Broadstone Net

Poor diversification

The 3 months correlation between VICI and Broadstone is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding VICI Properties and Broadstone Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadstone Net Lease and VICI Properties 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 VICI Properties are associated (or correlated) with Broadstone Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadstone Net Lease has no effect on the direction of VICI Properties i.e., VICI Properties and Broadstone Net go up and down completely randomly.

Pair Corralation between VICI Properties and Broadstone Net

Given the investment horizon of 90 days VICI Properties is expected to generate 0.94 times more return on investment than Broadstone Net. However, VICI Properties is 1.07 times less risky than Broadstone Net. It trades about -0.09 of its potential returns per unit of risk. Broadstone Net Lease is currently generating about -0.09 per unit of risk. If you would invest  3,314  in VICI Properties on September 12, 2024 and sell it today you would lose (170.00) from holding VICI Properties or give up 5.13% of portfolio value over 90 days.

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

VICI Properties  vs.  Broadstone Net Lease

VICI Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VICI Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, VICI Properties is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Broadstone Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadstone Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Broadstone Net is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with VICI Properties and Broadstone Net

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

The idea behind VICI Properties and Broadstone Net Lease 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.