Correlation Between EPR Properties and Newlake Capital

Can any of the company-specific risk be diversified away by investing in both EPR Properties and Newlake Capital 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 EPR Properties and Newlake Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between EPR Properties and Newlake Capital Partners, you can compare the effects of market volatilities on EPR Properties and Newlake Capital 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 EPR Properties with a short position of Newlake Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPR Properties and Newlake Capital.

Diversification Opportunities for EPR Properties and Newlake Capital

0.2

Correlation Coefficient

EPR Properties  Newlake Capital

Modest diversification

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

Pair Corralation between EPR Properties and Newlake Capital

Considering the 90-day investment horizon EPR Properties is expected to generate 8.72 times less return on investment than Newlake Capital. But when comparing it to its historical volatility, EPR Properties is 1.44 times less risky than Newlake Capital. It trades about 0.04 of its potential returns per unit of risk. Newlake Capital Partners is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,614  in Newlake Capital Partners on February 18, 2024 and sell it today you would earn a total of  395.00  from holding Newlake Capital Partners or generate 24.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

EPR Properties  vs.  Newlake Capital Partners

EPR Properties

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in EPR Properties are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, EPR Properties is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Newlake Capital Partners

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Newlake Capital Partners are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile fundamental indicators, Newlake Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EPR Properties and Newlake Capital

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

The idea behind EPR Properties and Newlake Capital Partners 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.