Correlation Between VICI Properties and Power REIT

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

Diversification Opportunities for VICI Properties and Power REIT

0.28

Correlation Coefficient

VICI Properties  Power REIT

Modest diversification

The 3 months correlation between VICI and Power is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding VICI Properties and Power REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power 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 Power REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power REIT has no effect on the direction of VICI Properties i.e., VICI Properties and Power REIT go up and down completely randomly.

Pair Corralation between VICI Properties and Power REIT

Given the investment horizon of 90 days VICI Properties is expected to generate 22.0 times less return on investment than Power REIT. But when comparing it to its historical volatility, VICI Properties is 7.28 times less risky than Power REIT. It trades about 0.02 of its potential returns per unit of risk. Power REIT is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  121.00  in Power REIT on November 28, 2024 and sell it today you would earn a total of  4.00  from holding Power REIT or generate 3.31% return on investment over 90 days.

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

VICI Properties  vs.  Power REIT

VICI Properties

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VICI Properties are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Power REIT

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Power REIT are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Power REIT showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VICI Properties and Power REIT

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

The idea behind VICI Properties and Power 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..