Correlation Between VICI Properties and Vornado Realty

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

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

Diversification Opportunities for VICI Properties and Vornado Realty

-0.29

Correlation Coefficient

VICI Properties  Vornado Realty

Very good diversification

The 3 months correlation between VICI and Vornado is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding VICI Properties and Vornado Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vornado Realty Trust 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 Vornado Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vornado Realty Trust has no effect on the direction of VICI Properties i.e., VICI Properties and Vornado Realty go up and down completely randomly.

Pair Corralation between VICI Properties and Vornado Realty

Given the investment horizon of 90 days VICI Properties is expected to generate 56.61 times less return on investment than Vornado Realty. But when comparing it to its historical volatility, VICI Properties is 2.64 times less risky than Vornado Realty. It trades about 0.0 of its potential returns per unit of risk. Vornado Realty Trust is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,231  in Vornado Realty Trust on October 4, 2024 and sell it today you would earn a total of  1,973  from holding Vornado Realty Trust or generate 88.44% return on investment over 90 days.

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

VICI Properties  vs.  Vornado Realty Trust

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 latest unfluctuating performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Vornado Realty Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vornado Realty Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Vornado Realty may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with VICI Properties and Vornado Realty

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

The idea behind VICI Properties and Vornado Realty Trust 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.