Correlation Between Essential Properties and Continental

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Can any of the company-specific risk be diversified away by investing in both Essential Properties and Continental 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 Essential Properties and Continental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Essential Properties Realty and Caleres, you can compare the effects of market volatilities on Essential Properties and Continental 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 Essential Properties with a short position of Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essential Properties and Continental.

Diversification Opportunities for Essential Properties and Continental

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Essential and Continental is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Essential Properties Realty and Caleres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental and Essential Properties 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 Essential Properties Realty are associated (or correlated) with Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental has no effect on the direction of Essential Properties i.e., Essential Properties and Continental go up and down completely randomly.

Pair Corralation between Essential Properties and Continental

Given the investment horizon of 90 days Essential Properties Realty is expected to under-perform the Continental. But the stock apears to be less risky and, when comparing its historical volatility, Essential Properties Realty is 2.26 times less risky than Continental. The stock trades about -0.08 of its potential returns per unit of risk. The Caleres is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,292  in Caleres on July 1, 2022 and sell it today you would earn a total of  199.00  from holding Caleres or generate 8.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Essential Properties Realty  vs.  Caleres

 Performance (%) 
       Timeline  
Essential Properties 
Essential Performance
0 of 100
Over the last 90 days Essential Properties Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in October 2022. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Essential Price Channel

Continental 
Continental Performance
0 of 100
Over the last 90 days Caleres has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Continental is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Continental Price Channel

Essential Properties and Continental Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Essential Properties and Continental

The main advantage of trading using opposite Essential Properties and Continental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essential Properties position performs unexpectedly, Continental 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 Continental will offset losses from the drop in Continental's long position.
Essential Properties vs. WP Carey Co
The idea behind Essential Properties Realty and Caleres 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.
Continental vs. Amazon Inc
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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