Correlation Between Realty Income and Great Ajax

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

Diversification Opportunities for Realty Income and Great Ajax

0.76
  Correlation Coefficient

Poor diversification

The 3 months correlation between Realty and Great is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income Corp and Great Ajax Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Ajax Corp and Realty Income 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 Realty Income Corp are associated (or correlated) with Great Ajax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Ajax Corp has no effect on the direction of Realty Income i.e., Realty Income and Great Ajax go up and down completely randomly.

Pair Corralation between Realty Income and Great Ajax

Taking into account the 90-day investment horizon Realty Income Corp is expected to generate 0.48 times more return on investment than Great Ajax. However, Realty Income Corp is 2.07 times less risky than Great Ajax. It trades about -0.55 of its potential returns per unit of risk. Great Ajax Corp is currently generating about -0.35 per unit of risk. If you would invest  6,999  in Realty Income Corp on June 28, 2022 and sell it today you would lose (909.00)  from holding Realty Income Corp or give up 12.99% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Realty Income Corp  vs.  Great Ajax Corp

 Performance (%) 
       Timeline  
Realty Income Corp 
Realty Performance
0 of 100
Over the last 90 days Realty Income Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Realty Price Channel

Great Ajax Corp 
Great Performance
0 of 100
Over the last 90 days Great Ajax Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's forward-looking indicators remain fairly strong which may send shares a bit higher in October 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Great Price Channel

Realty Income and Great Ajax Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Realty Income and Great Ajax

The main advantage of trading using opposite Realty Income and Great Ajax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realty Income position performs unexpectedly, Great Ajax 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 Great Ajax will offset losses from the drop in Great Ajax's long position.
Realty Income vs. Clearwater Paper Corp
The idea behind Realty Income Corp and Great Ajax Corp 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.
Great Ajax vs. Clearwater Paper Corp
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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