Correlation Between Wheeler Real and Realty Income

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

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

Diversification Opportunities for Wheeler Real and Realty Income

-0.89

Correlation Coefficient

Wheeler Real  Realty Income

Pay attention - limited upside

The 3 months correlation between Wheeler and Realty is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Wheeler Real Estate and Realty Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realty Income and Wheeler Real 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 Wheeler Real Estate are associated (or correlated) with Realty Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realty Income has no effect on the direction of Wheeler Real i.e., Wheeler Real and Realty Income go up and down completely randomly.

Pair Corralation between Wheeler Real and Realty Income

Given the investment horizon of 90 days Wheeler Real Estate is expected to generate 39.75 times more return on investment than Realty Income. However, Wheeler Real is 39.75 times more volatile than Realty Income. It trades about 0.07 of its potential returns per unit of risk. Realty Income is currently generating about 0.19 per unit of risk. If you would invest  1,465  in Wheeler Real Estate on June 12, 2024 and sell it today you would lose (800.00) from holding Wheeler Real Estate or give up 54.61% of portfolio value over 90 days.

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

Wheeler Real Estate  vs.  Realty Income

Wheeler Real Estate

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wheeler Real Estate are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain essential indicators, Wheeler Real reported solid returns over the last few months and may actually be approaching a breakup point.

Realty Income

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Realty Income are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Realty Income displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wheeler Real and Realty Income

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

The idea behind Wheeler Real Estate and Realty Income 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.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.