Correlation Between Suntec Real and Global Net

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

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

Diversification Opportunities for Suntec Real and Global Net

0.31

Correlation Coefficient

Suntec Real  Global Net

Weak diversification

The 3 months correlation between Suntec and Global is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Suntec Real Estate 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 Suntec Real 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 Suntec Real Estate 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 Suntec Real i.e., Suntec Real and Global Net go up and down completely randomly.

Pair Corralation between Suntec Real and Global Net

Assuming the 90 days horizon Suntec Real Estate is expected to under-perform the Global Net. But the pink sheet apears to be less risky and, when comparing its historical volatility, Suntec Real Estate is 1.35 times less risky than Global Net. The pink sheet trades about -0.15 of its potential returns per unit of risk. The Global Net Lease is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  691.00  in Global Net Lease on February 5, 2024 and sell it today you would earn a total of  25.00  from holding Global Net Lease or generate 3.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.67%
Values	Daily Returns

Suntec Real Estate  vs.  Global Net Lease

Suntec Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Suntec Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 inconsistent 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 Suntec Real and Global Net

The main advantage of trading using opposite Suntec Real and Global Net positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suntec Real 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 Suntec Real Estate 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.