Correlation Between WP Carey and Cto Realty

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

Diversification Opportunities for WP Carey and Cto Realty

0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between WP Carey and Cto Realty is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding WP Carey Co and Cto Realty Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cto Realty Growth and WP Carey 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 WP Carey Co are associated (or correlated) with Cto Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cto Realty Growth has no effect on the direction of WP Carey i.e., WP Carey and Cto Realty go up and down completely randomly.

Pair Corralation between WP Carey and Cto Realty

Considering the 90-day investment horizon WP Carey is expected to generate 1.91 times less return on investment than Cto Realty. But when comparing it to its historical volatility, WP Carey Co is 1.34 times less risky than Cto Realty. It trades about 0.05 of its potential returns per unit of risk. Cto Realty Growth is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,233  in Cto Realty Growth on August 29, 2022 and sell it today you would earn a total of  813.00  from holding Cto Realty Growth or generate 65.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.79%
ValuesDaily Returns

WP Carey Co  vs.  Cto Realty Growth

 Performance (%) 
       Timeline  
WP Carey 
WP Carey Performance
0 of 100
Over the last 90 days WP Carey Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, WP Carey is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

WP Carey Price Channel

Cto Realty Growth 
Cto Realty Performance
0 of 100
Over the last 90 days Cto Realty Growth has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Cto Realty is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Cto Realty Price Channel

WP Carey and Cto Realty Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with WP Carey and Cto Realty

The main advantage of trading using opposite WP Carey and Cto Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WP Carey position performs unexpectedly, Cto Realty 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 Cto Realty will offset losses from the drop in Cto Realty's long position.
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The idea behind WP Carey Co and Cto Realty Growth 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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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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