Correlation Between Realty Income and Realogy Holdings

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

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

Diversification Opportunities for Realty Income and Realogy Holdings

-0.06

Correlation Coefficient

Realty Income  Realogy Holdings

Good diversification

The 3 months correlation between Realty and Realogy is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income Corp and Realogy Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Realogy Holdings Corp and Realty Income 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 Realty Income Corp are associated (or correlated) with Realogy Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Realogy Holdings Corp has no effect on the direction of Realty Income i.e., Realty Income and Realogy Holdings go up and down completely randomly.

Pair Corralation between Realty Income and Realogy Holdings

If you would invest  5,301  in Realty Income Corp on February 5, 2024 and sell it today you would earn a total of  225.00  from holding Realty Income Corp or generate 4.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Realty Income Corp  vs.  Realogy Holdings Corp

Realty Income Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Realty Income Corp are ranked lower than 7 (%) 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.

Realogy Holdings Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Realogy Holdings Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Realogy Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Realty Income and Realogy Holdings

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

The idea behind Realty Income Corp and Realogy Holdings 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.