Correlation Between W P and STAG Industrial

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

Diversification Opportunities for W P and STAG Industrial

0.88

Correlation Coefficient

W P  STAG Industrial

Very poor diversification

The 3 months correlation between WPC and STAG is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding W P Carey and STAG Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STAG Industrial 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 STAG Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STAG Industrial has no effect on the direction of W P i.e., W P and STAG Industrial go up and down completely randomly.

Pair Corralation between W P and STAG Industrial

Considering the 90-day investment horizon W P Carey is expected to generate 0.97 times more return on investment than STAG Industrial. However, W P Carey is 1.03 times less risky than STAG Industrial. It trades about 0.2 of its potential returns per unit of risk. STAG Industrial is currently generating about 0.06 per unit of risk. If you would invest  5,395  in W P Carey on December 26, 2024 and sell it today you would earn a total of  895.00  from holding W P Carey or generate 16.59% return on investment over 90 days.

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

W P Carey  vs.  STAG Industrial

W P Carey

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in W P Carey are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, W P exhibited solid returns over the last few months and may actually be approaching a breakup point.

STAG Industrial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in STAG Industrial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, STAG Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with W P and STAG Industrial

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

The idea behind W P Carey and STAG Industrial 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.