Correlation Between Medalist Diversified and Modiv

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

By analyzing existing cross correlation between Medalist Diversified Reit and Modiv Inc, you can compare the effects of market volatilities on Medalist Diversified and Modiv 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 Medalist Diversified with a short position of Modiv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medalist Diversified and Modiv.

Diversification Opportunities for Medalist Diversified and Modiv

-0.1

Correlation Coefficient

Medalist Diversified  Modiv

Good diversification

The 3 months correlation between Medalist and Modiv is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Medalist Diversified Reit and Modiv Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modiv Inc and Medalist Diversified 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 Medalist Diversified Reit are associated (or correlated) with Modiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modiv Inc has no effect on the direction of Medalist Diversified i.e., Medalist Diversified and Modiv go up and down completely randomly.

Pair Corralation between Medalist Diversified and Modiv

Given the investment horizon of 90 days Medalist Diversified is expected to generate 2.33 times less return on investment than Modiv. But when comparing it to its historical volatility, Medalist Diversified Reit is 1.01 times less risky than Modiv. It trades about 0.01 of its potential returns per unit of risk. Modiv Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,417  in Modiv Inc on January 9, 2025 and sell it today you would earn a total of  22.00  from holding Modiv Inc or generate 1.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.44%
Values	Daily Returns

Medalist Diversified Reit  vs.  Modiv Inc

Medalist Diversified Reit

Risk-Adjusted Performance

Weak

Over the last 90 days Medalist Diversified Reit has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Medalist Diversified is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Modiv Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Modiv Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable fundamental indicators, Modiv is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Medalist Diversified and Modiv

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

The idea behind Medalist Diversified Reit and Modiv Inc 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.