Correlation Between Realty Income and Brooge Holdings

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

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

Diversification Opportunities for Realty Income and Brooge Holdings

-0.04

Correlation Coefficient

Realty Income  Brooge Holdings

Good diversification

The 3 months correlation between Realty and Brooge is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income and Brooge Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brooge Holdings 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 are associated (or correlated) with Brooge Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brooge Holdings has no effect on the direction of Realty Income i.e., Realty Income and Brooge Holdings go up and down completely randomly.

Pair Corralation between Realty Income and Brooge Holdings

Taking into account the 90-day investment horizon Realty Income is expected to under-perform the Brooge Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Realty Income is 5.48 times less risky than Brooge Holdings. The stock trades about -0.13 of its potential returns per unit of risk. The Brooge Holdings is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  127.00  in Brooge Holdings on February 20, 2025 and sell it today you would earn a total of  29.00  from holding Brooge Holdings or generate 22.83% return on investment over 90 days.

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

Realty Income  vs.  Brooge Holdings

Realty Income

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Realty Income are ranked lower than 1 (%) 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.

Brooge Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brooge Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Brooge Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Realty Income and Brooge Holdings

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

The idea behind Realty Income and Brooge Holdings 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.