Correlation Between Vornado Realty and Ventas

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

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

Diversification Opportunities for Vornado Realty and Ventas

0.52

Correlation Coefficient

Vornado Realty  Ventas

Very weak diversification

The 3 months correlation between Vornado and Ventas is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Vornado Realty Trust and Ventas Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ventas Inc and Vornado Realty 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 Vornado Realty Trust are associated (or correlated) with Ventas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ventas Inc has no effect on the direction of Vornado Realty i.e., Vornado Realty and Ventas go up and down completely randomly.

Pair Corralation between Vornado Realty and Ventas

Considering the 90-day investment horizon Vornado Realty Trust is expected to generate 1.42 times more return on investment than Ventas. However, Vornado Realty is 1.42 times more volatile than Ventas Inc. It trades about 0.24 of its potential returns per unit of risk. Ventas Inc is currently generating about 0.05 per unit of risk. If you would invest  3,353  in Vornado Realty Trust on September 3, 2024 and sell it today you would earn a total of  952.00  from holding Vornado Realty Trust or generate 28.39% return on investment over 90 days.

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

Vornado Realty Trust  vs.  Ventas Inc

Vornado Realty Trust

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vornado Realty Trust are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Vornado Realty displayed solid returns over the last few months and may actually be approaching a breakup point.

Ventas Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ventas Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Ventas is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Vornado Realty and Ventas

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

The idea behind Vornado Realty Trust and Ventas Inc 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 Commodity Directory module to find actively traded commodities issued by global exchanges.