Correlation Between CTO Realty and Tejon Ranch

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

By analyzing existing cross correlation between CTO Realty Growth and Tejon Ranch Co, you can compare the effects of market volatilities on CTO Realty and Tejon Ranch 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 CTO Realty with a short position of Tejon Ranch. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTO Realty and Tejon Ranch.

Diversification Opportunities for CTO Realty and Tejon Ranch

-0.5

Correlation Coefficient

CTO Realty  Tejon Ranch

Very good diversification

The 3 months correlation between CTO and Tejon is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding CTO Realty Growth and Tejon Ranch Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tejon Ranch and CTO 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 CTO Realty Growth are associated (or correlated) with Tejon Ranch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tejon Ranch has no effect on the direction of CTO Realty i.e., CTO Realty and Tejon Ranch go up and down completely randomly.

Pair Corralation between CTO Realty and Tejon Ranch

Considering the 90-day investment horizon CTO Realty Growth is expected to under-perform the Tejon Ranch. In addition to that, CTO Realty is 1.01 times more volatile than Tejon Ranch Co. It trades about -0.06 of its total potential returns per unit of risk. Tejon Ranch Co is currently generating about 0.06 per unit of volatility. If you would invest  1,702  in Tejon Ranch Co on May 5, 2025 and sell it today you would earn a total of  86.00  from holding Tejon Ranch Co or generate 5.05% return on investment over 90 days.

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

CTO Realty Growth  vs.  Tejon Ranch Co

CTO Realty Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days CTO Realty Growth has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, CTO Realty is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Tejon Ranch

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tejon Ranch Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Tejon Ranch is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CTO Realty and Tejon Ranch

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

The idea behind CTO Realty Growth and Tejon Ranch Co 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.