Correlation Between British Land and Global Net

Can any of the company-specific risk be diversified away by investing in both British Land and Global Net 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 British Land and Global Net into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between British Land and Global Net Lease, you can compare the effects of market volatilities on British Land and Global Net 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 British Land with a short position of Global Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of British Land and Global Net.

Diversification Opportunities for British Land and Global Net

0.15

Correlation Coefficient

British Land  Global Net

Average diversification

The 3 months correlation between British and Global is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding British Land and Global Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Net Lease and British Land 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 British Land are associated (or correlated) with Global Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Net Lease has no effect on the direction of British Land i.e., British Land and Global Net go up and down completely randomly.

Pair Corralation between British Land and Global Net

Assuming the 90 days horizon British Land is expected to generate 0.7 times more return on investment than Global Net. However, British Land is 1.44 times less risky than Global Net. It trades about 0.14 of its potential returns per unit of risk. Global Net Lease is currently generating about 0.01 per unit of risk. If you would invest  481.00  in British Land on February 4, 2024 and sell it today you would earn a total of  20.50  from holding British Land or generate 4.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

British Land  vs.  Global Net Lease

British Land

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in British Land are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting fundamental indicators, British Land may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Global Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak 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.

Pair Trading with British Land and Global Net

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

The idea behind British Land and Global Net Lease 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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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.