Correlation Between KAUFMAN ET and CENTURIA OFFICE
Can any of the company-specific risk be diversified away by investing in both KAUFMAN ET and CENTURIA OFFICE 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 KAUFMAN ET and CENTURIA OFFICE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAUFMAN ET BROAD and CENTURIA OFFICE REIT, you can compare the effects of market volatilities on KAUFMAN ET and CENTURIA OFFICE 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 KAUFMAN ET with a short position of CENTURIA OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAUFMAN ET and CENTURIA OFFICE.
Diversification Opportunities for KAUFMAN ET and CENTURIA OFFICE
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KAUFMAN and CENTURIA is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding KAUFMAN ET BROAD and CENTURIA OFFICE REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTURIA OFFICE REIT and KAUFMAN ET 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 KAUFMAN ET BROAD are associated (or correlated) with CENTURIA OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTURIA OFFICE REIT has no effect on the direction of KAUFMAN ET i.e., KAUFMAN ET and CENTURIA OFFICE go up and down completely randomly.
Pair Corralation between KAUFMAN ET and CENTURIA OFFICE
Assuming the 90 days trading horizon KAUFMAN ET BROAD is expected to generate 1.22 times more return on investment than CENTURIA OFFICE. However, KAUFMAN ET is 1.22 times more volatile than CENTURIA OFFICE REIT. It trades about 0.04 of its potential returns per unit of risk. CENTURIA OFFICE REIT is currently generating about 0.02 per unit of risk. If you would invest 2,469 in KAUFMAN ET BROAD on September 1, 2024 and sell it today you would earn a total of 631.00 from holding KAUFMAN ET BROAD or generate 25.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAUFMAN ET BROAD vs. CENTURIA OFFICE REIT
Performance |
| Timeline |
| KAUFMAN ET BROAD |
| CENTURIA OFFICE REIT |
KAUFMAN ET and CENTURIA OFFICE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAUFMAN ET and CENTURIA OFFICE
The main advantage of trading using opposite KAUFMAN ET and CENTURIA OFFICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAUFMAN ET position performs unexpectedly, CENTURIA OFFICE 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 CENTURIA OFFICE will offset losses from the drop in CENTURIA OFFICE's long position.| KAUFMAN ET vs. SIVERS SEMICONDUCTORS AB | KAUFMAN ET vs. Darden Restaurants | KAUFMAN ET vs. Reliance Steel Aluminum | KAUFMAN ET vs. Q2M Managementberatung AG |
| CENTURIA OFFICE vs. Rayonier Advanced Materials | CENTURIA OFFICE vs. EMBARK EDUCATION LTD | CENTURIA OFFICE vs. Mitsubishi Materials | CENTURIA OFFICE vs. TAL Education Group |
Check out your portfolio center.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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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