Correlation Between VICI Properties and COPT Defense

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

By analyzing existing cross correlation between VICI Properties and COPT Defense Properties, you can compare the effects of market volatilities on VICI Properties and COPT Defense 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 COPT Defense. Check out your portfolio center. Please also check ongoing floating volatility patterns of VICI Properties and COPT Defense.

Diversification Opportunities for VICI Properties and COPT Defense

-0.51

Correlation Coefficient

VICI Properties  COPT Defense

Excellent diversification

The 3 months correlation between VICI and COPT is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding VICI Properties and COPT Defense Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COPT Defense Properties 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 COPT Defense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COPT Defense Properties has no effect on the direction of VICI Properties i.e., VICI Properties and COPT Defense go up and down completely randomly.

Pair Corralation between VICI Properties and COPT Defense

Given the investment horizon of 90 days VICI Properties is expected to under-perform the COPT Defense. But the stock apears to be less risky and, when comparing its historical volatility, VICI Properties is 1.22 times less risky than COPT Defense. The stock trades about -0.02 of its potential returns per unit of risk. The COPT Defense Properties is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,899  in COPT Defense Properties on August 31, 2024 and sell it today you would earn a total of  384.00  from holding COPT Defense Properties or generate 13.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

VICI Properties  vs.  COPT Defense Properties

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.

COPT Defense Properties

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in COPT Defense Properties are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, COPT Defense reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VICI Properties and COPT Defense

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

The idea behind VICI Properties and COPT Defense 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..