REITs, stock correlated 7.1% of the time in NAREIT study

12/4/2011 | InvestmentNews (free registration)

Many investors are underallocated to REITs because they view REITs as a stock, with high correlation to the rest of the stock market. However, according to NAREIT's Brad Case, while REITs' correlation with stocks can be high in the short run, it is significantly reduced over the longer holding periods that are relevant to most investors. Measuring the correlation of the Standard & Poor's 500 index and REITs between January 1990 and October 2011 in five-year increments, Case found that they correlated 7.1% of the time.

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