Correlation Between Getty Realty and Realty Income

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

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

Diversification Opportunities for Getty Realty and Realty Income

0.79

Correlation Coefficient

Getty Realty  Realty Income

Poor diversification

The 3 months correlation between Getty and Realty is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Getty Realty and Realty Income Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realty Income Corp and Getty 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 Getty Realty are associated (or correlated) with Realty Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realty Income Corp has no effect on the direction of Getty Realty i.e., Getty Realty and Realty Income go up and down completely randomly.

Pair Corralation between Getty Realty and Realty Income

Considering the 90-day investment horizon Getty Realty is expected to generate 1.01 times less return on investment than Realty Income. But when comparing it to its historical volatility, Getty Realty is 1.04 times less risky than Realty Income. It trades about 0.13 of its potential returns per unit of risk. Realty Income Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  5,301  in Realty Income Corp on February 5, 2024 and sell it today you would earn a total of  190.00  from holding Realty Income Corp or generate 3.58% return on investment over 90 days.

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

Getty Realty  vs.  Realty Income Corp

Getty Realty

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Getty Realty are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Getty Realty is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Realty Income Corp

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Realty Income Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Realty Income is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Getty Realty and Realty Income

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

The idea behind Getty Realty and Realty Income 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.