Correlation Between Vornado Realty and Japan Real

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

Diversification Opportunities for Vornado Realty and Japan Real

0.12

Correlation Coefficient

Vornado Realty  Japan Real

Average diversification

The 3 months correlation between Vornado and Japan is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Vornado Realty Trust and Japan Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Real Estate 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 Japan Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Real Estate has no effect on the direction of Vornado Realty i.e., Vornado Realty and Japan Real go up and down completely randomly.

Pair Corralation between Vornado Realty and Japan Real

Assuming the 90 days horizon Vornado Realty Trust is expected to under-perform the Japan Real. In addition to that, Vornado Realty is 1.8 times more volatile than Japan Real Estate. It trades about -0.07 of its total potential returns per unit of risk. Japan Real Estate is currently generating about 0.08 per unit of volatility. If you would invest  62,589  in Japan Real Estate on December 29, 2024 and sell it today you would earn a total of  3,911  from holding Japan Real Estate or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Vornado Realty Trust  vs.  Japan Real Estate

Vornado Realty Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vornado Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Japan Real Estate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Real Estate are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Japan Real may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Vornado Realty and Japan Real

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

The idea behind Vornado Realty Trust and Japan Real Estate 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.