Correlation Between One Liberty and Trinity Capital

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

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

Diversification Opportunities for One Liberty and Trinity Capital

0.38

Correlation Coefficient

One Liberty  Trinity Capital

Weak diversification

The 3 months correlation between One and Trinity is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding One Liberty Properties and Trinity Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trinity Capital and One Liberty 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 One Liberty Properties are associated (or correlated) with Trinity Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trinity Capital has no effect on the direction of One Liberty i.e., One Liberty and Trinity Capital go up and down completely randomly.

Pair Corralation between One Liberty and Trinity Capital

Considering the 90-day investment horizon One Liberty is expected to generate 1.66 times less return on investment than Trinity Capital. But when comparing it to its historical volatility, One Liberty Properties is 1.13 times less risky than Trinity Capital. It trades about 0.05 of its potential returns per unit of risk. Trinity Capital is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  796.00  in Trinity Capital on August 20, 2024 and sell it today you would earn a total of  635.00  from holding Trinity Capital or generate 79.77% return on investment over 90 days.

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

One Liberty Properties  vs.  Trinity Capital

One Liberty Properties

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in One Liberty Properties are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating essential indicators, One Liberty may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Trinity Capital

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Trinity Capital are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Trinity Capital is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with One Liberty and Trinity Capital

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

The idea behind One Liberty Properties and Trinity Capital 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.