Correlation Between Farmland Partners and EPR Properties
Can any of the company-specific risk be diversified away by investing in both Farmland Partners and EPR Properties 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 Farmland Partners and EPR Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farmland Partners and EPR Properties, you can compare the effects of market volatilities on Farmland Partners and EPR Properties 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 Farmland Partners with a short position of EPR Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farmland Partners and EPR Properties.
Diversification Opportunities for Farmland Partners and EPR Properties
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Farmland and EPR is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Farmland Partners and EPR Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPR Properties and Farmland Partners 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 Farmland Partners are associated (or correlated) with EPR Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPR Properties has no effect on the direction of Farmland Partners i.e., Farmland Partners and EPR Properties go up and down completely randomly.
Pair Corralation between Farmland Partners and EPR Properties
Considering the 90-day investment horizon Farmland Partners is expected to under-perform the EPR Properties. In addition to that, Farmland Partners is 1.4 times more volatile than EPR Properties. It trades about -0.09 of its total potential returns per unit of risk. EPR Properties is currently generating about 0.27 per unit of volatility. If you would invest 4,050 in EPR Properties on June 23, 2024 and sell it today you would earn a total of 821.00 from holding EPR Properties or generate 20.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Farmland Partners vs. EPR Properties
Performance |
Timeline |
Farmland Partners |
EPR Properties |
Farmland Partners and EPR Properties Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Farmland Partners and EPR Properties
The main advantage of trading using opposite Farmland Partners and EPR Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farmland Partners position performs unexpectedly, EPR Properties 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 EPR Properties will offset losses from the drop in EPR Properties' long position.Farmland Partners vs. Newlake Capital Partners | Farmland Partners vs. Uniti Group | Farmland Partners vs. EPR Properties | Farmland Partners vs. Digital Realty Trust |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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