Correlation Between VICI Properties and Realty Income

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

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

Diversification Opportunities for VICI Properties and Realty Income

0.94

Correlation Coefficient

VICI Properties  Realty Income

Almost no diversification

The 3 months correlation between VICI and Realty is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding VICI Properties and Realty Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realty Income 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 Realty Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realty Income has no effect on the direction of VICI Properties i.e., VICI Properties and Realty Income go up and down completely randomly.

Pair Corralation between VICI Properties and Realty Income

Given the investment horizon of 90 days VICI Properties is expected to under-perform the Realty Income. In addition to that, VICI Properties is 1.1 times more volatile than Realty Income. It trades about -0.05 of its total potential returns per unit of risk. Realty Income is currently generating about -0.04 per unit of volatility. If you would invest  5,636  in Realty Income on November 19, 2024 and sell it today you would lose (187.00) from holding Realty Income or give up 3.32% of portfolio value over 90 days.

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

VICI Properties  vs.  Realty Income

VICI Properties

Risk-Adjusted Performance

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.

Realty Income

Risk-Adjusted Performance

Very Weak

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

Pair Trading with VICI Properties and Realty Income

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

The idea behind VICI Properties and Realty Income 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.