Correlation Between W P and Alexanders

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

By analyzing existing cross correlation between W P Carey and Alexanders, you can compare the effects of market volatilities on W P and Alexanders 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 W P with a short position of Alexanders. Check out your portfolio center. Please also check ongoing floating volatility patterns of W P and Alexanders.

Diversification Opportunities for W P and Alexanders

0.76

Correlation Coefficient

W P  Alexanders

Poor diversification

The 3 months correlation between WPC and Alexanders is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding W P Carey and Alexanders in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexanders and W P 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 W P Carey are associated (or correlated) with Alexanders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexanders has no effect on the direction of W P i.e., W P and Alexanders go up and down completely randomly.

Pair Corralation between W P and Alexanders

Considering the 90-day investment horizon W P Carey is expected to under-perform the Alexanders. But the stock apears to be less risky and, when comparing its historical volatility, W P Carey is 1.54 times less risky than Alexanders. The stock trades about -0.07 of its potential returns per unit of risk. The Alexanders is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  22,540  in Alexanders on September 2, 2024 and sell it today you would lose (179.00) from holding Alexanders or give up 0.79% of portfolio value over 90 days.

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

W P Carey  vs.  Alexanders

W P Carey

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days W P Carey has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, W P is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Alexanders

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alexanders has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Alexanders is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with W P and Alexanders

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

The idea behind W P Carey and Alexanders 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.