Correlation Between CTO Realty and Broadstone Net

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

By analyzing existing cross correlation between CTO Realty Growth and Broadstone Net LeaseInc, you can compare the effects of market volatilities on CTO Realty and Broadstone 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 CTO Realty with a short position of Broadstone Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTO Realty and Broadstone Net.

Diversification Opportunities for CTO Realty and Broadstone Net

-0.2

Correlation Coefficient

CTO Realty  Broadstone Net

Good diversification

The 3 months correlation between CTO and Broadstone is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding CTO Realty Growth and Broadstone Net LeaseInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadstone Net LeaseInc and CTO Realty 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 CTO Realty Growth are associated (or correlated) with Broadstone Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadstone Net LeaseInc has no effect on the direction of CTO Realty i.e., CTO Realty and Broadstone Net go up and down completely randomly.

Pair Corralation between CTO Realty and Broadstone Net

Assuming the 90 days trading horizon CTO Realty Growth is expected to generate 1.1 times more return on investment than Broadstone Net. However, CTO Realty is 1.1 times more volatile than Broadstone Net LeaseInc. It trades about 0.01 of its potential returns per unit of risk. Broadstone Net LeaseInc is currently generating about -0.02 per unit of risk. If you would invest  1,998  in CTO Realty Growth on February 13, 2024 and sell it today you would earn a total of  92.00  from holding CTO Realty Growth or generate 4.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.58%
Values	Daily Returns

CTO Realty Growth  vs.  Broadstone Net LeaseInc

CTO Realty Growth

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CTO Realty Growth are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CTO Realty is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Broadstone Net LeaseInc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Broadstone Net LeaseInc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Broadstone Net is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with CTO Realty and Broadstone Net

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

The idea behind CTO Realty Growth and Broadstone Net LeaseInc 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.