Correlation Between Power REIT and Elme Communities
Can any of the company-specific risk be diversified away by investing in both Power REIT and Elme Communities 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 Power REIT and Elme Communities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power REIT and Elme Communities, you can compare the effects of market volatilities on Power REIT and Elme Communities 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 Power REIT with a short position of Elme Communities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power REIT and Elme Communities.
Diversification Opportunities for Power REIT and Elme Communities
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Power and Elme is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Power REIT and Elme Communities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elme Communities and Power REIT 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 Power REIT are associated (or correlated) with Elme Communities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elme Communities has no effect on the direction of Power REIT i.e., Power REIT and Elme Communities go up and down completely randomly.
Pair Corralation between Power REIT and Elme Communities
Allowing for the 90-day total investment horizon Power REIT is expected to generate 6.56 times more return on investment than Elme Communities. However, Power REIT is 6.56 times more volatile than Elme Communities. It trades about 0.02 of its potential returns per unit of risk. Elme Communities is currently generating about 0.0 per unit of risk. If you would invest 391.00 in Power REIT on September 24, 2024 and sell it today you would lose (267.00) from holding Power REIT or give up 68.29% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Power REIT vs. Elme Communities
Performance |
Timeline |
Power REIT |
Elme Communities |
Power REIT and Elme Communities Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Power REIT and Elme Communities
The main advantage of trading using opposite Power REIT and Elme Communities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power REIT position performs unexpectedly, Elme Communities 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 Elme Communities will offset losses from the drop in Elme Communities' long position.Power REIT vs. Newlake Capital Partners | Power REIT vs. Uniti Group | Power REIT vs. EPR Properties | Power REIT 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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