Correlation Between Essential Properties and Netstreit Corp

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

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

Diversification Opportunities for Essential Properties and Netstreit Corp

-0.43

Correlation Coefficient

Essential Properties  Netstreit Corp

Very good diversification

The 3 months correlation between Essential and Netstreit is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Essential Properties Realty and Netstreit Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netstreit Corp and Essential Properties 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 Essential Properties Realty are associated (or correlated) with Netstreit Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netstreit Corp has no effect on the direction of Essential Properties i.e., Essential Properties and Netstreit Corp go up and down completely randomly.

Pair Corralation between Essential Properties and Netstreit Corp

Given the investment horizon of 90 days Essential Properties Realty is expected to under-perform the Netstreit Corp. In addition to that, Essential Properties is 1.03 times more volatile than Netstreit Corp. It trades about -0.04 of its total potential returns per unit of risk. Netstreit Corp is currently generating about 0.24 per unit of volatility. If you would invest  1,582  in Netstreit Corp on May 2, 2025 and sell it today you would earn a total of  266.00  from holding Netstreit Corp or generate 16.81% return on investment over 90 days.

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

Essential Properties Realty  vs.  Netstreit Corp

Essential Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Essential Properties Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Essential Properties is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Netstreit Corp

Risk-Adjusted Performance

Solid

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

Pair Trading with Essential Properties and Netstreit Corp

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

The idea behind Essential Properties Realty and Netstreit Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.