Correlation Between CENTURIA OFFICE and Bayer AG
Can any of the company-specific risk be diversified away by investing in both CENTURIA OFFICE and Bayer AG 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 CENTURIA OFFICE and Bayer AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CENTURIA OFFICE REIT and Bayer AG NA, you can compare the effects of market volatilities on CENTURIA OFFICE and Bayer AG 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 CENTURIA OFFICE with a short position of Bayer AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of CENTURIA OFFICE and Bayer AG.
Diversification Opportunities for CENTURIA OFFICE and Bayer AG
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CENTURIA and Bayer is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CENTURIA OFFICE REIT and Bayer AG NA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayer AG NA and CENTURIA OFFICE 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 CENTURIA OFFICE REIT are associated (or correlated) with Bayer AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayer AG NA has no effect on the direction of CENTURIA OFFICE i.e., CENTURIA OFFICE and Bayer AG go up and down completely randomly.
Pair Corralation between CENTURIA OFFICE and Bayer AG
Assuming the 90 days horizon CENTURIA OFFICE is expected to generate 1.06 times less return on investment than Bayer AG. But when comparing it to its historical volatility, CENTURIA OFFICE REIT is 1.11 times less risky than Bayer AG. It trades about 0.12 of its potential returns per unit of risk. Bayer AG NA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,156 in Bayer AG NA on November 27, 2024 and sell it today you would earn a total of 68.00 from holding Bayer AG NA or generate 3.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CENTURIA OFFICE REIT vs. Bayer AG NA
Performance |
| Timeline |
| CENTURIA OFFICE REIT |
| Bayer AG NA |
CENTURIA OFFICE and Bayer AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CENTURIA OFFICE and Bayer AG
The main advantage of trading using opposite CENTURIA OFFICE and Bayer AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CENTURIA OFFICE position performs unexpectedly, Bayer AG 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 Bayer AG will offset losses from the drop in Bayer AG's long position.| CENTURIA OFFICE vs. AGRICULTBK HADR25 YC | CENTURIA OFFICE vs. JAPAN AIRLINES | CENTURIA OFFICE vs. Sumitomo Mitsui Construction | CENTURIA OFFICE vs. Nufarm Limited |
| Bayer AG vs. CN MODERN DAIRY | Bayer AG vs. Collins Foods Limited | Bayer AG vs. G8 EDUCATION | Bayer AG vs. STRAYER EDUCATION |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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