Correlation Between VICI Properties and Highlands REIT

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

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

Diversification Opportunities for VICI Properties and Highlands REIT

0.11

Correlation Coefficient

VICI Properties  Highlands REIT

Average diversification

The 3 months correlation between VICI and Highlands is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding VICI Properties and Highlands REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlands REIT 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 Highlands REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlands REIT has no effect on the direction of VICI Properties i.e., VICI Properties and Highlands REIT go up and down completely randomly.

Pair Corralation between VICI Properties and Highlands REIT

Given the investment horizon of 90 days VICI Properties is expected to generate 1863.49 times less return on investment than Highlands REIT. But when comparing it to its historical volatility, VICI Properties is 111.37 times less risky than Highlands REIT. It trades about 0.01 of its potential returns per unit of risk. Highlands REIT is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Highlands REIT on September 5, 2024 and sell it today you would lose (13.00) from holding Highlands REIT or give up 76.47% of portfolio value over 90 days.

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

VICI Properties  vs.  Highlands REIT

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.

Highlands REIT

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Highlands REIT are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent fundamental indicators, Highlands REIT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VICI Properties and Highlands REIT

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

The idea behind VICI Properties and Highlands REIT 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.