Correlation Between CITY OFFICE and Kaufman Broad
Can any of the company-specific risk be diversified away by investing in both CITY OFFICE and Kaufman Broad 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 CITY OFFICE and Kaufman Broad into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CITY OFFICE REIT and Kaufman Broad SA, you can compare the effects of market volatilities on CITY OFFICE and Kaufman Broad 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 CITY OFFICE with a short position of Kaufman Broad. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITY OFFICE and Kaufman Broad.
Diversification Opportunities for CITY OFFICE and Kaufman Broad
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CITY and Kaufman is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT and Kaufman Broad SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaufman Broad SA and CITY 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 CITY OFFICE REIT are associated (or correlated) with Kaufman Broad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaufman Broad SA has no effect on the direction of CITY OFFICE i.e., CITY OFFICE and Kaufman Broad go up and down completely randomly.
Pair Corralation between CITY OFFICE and Kaufman Broad
Assuming the 90 days horizon CITY OFFICE REIT is expected to generate 1.61 times more return on investment than Kaufman Broad. However, CITY OFFICE is 1.61 times more volatile than Kaufman Broad SA. It trades about 0.07 of its potential returns per unit of risk. Kaufman Broad SA is currently generating about 0.06 per unit of risk. If you would invest 404.00 in CITY OFFICE REIT on October 13, 2024 and sell it today you would earn a total of 116.00 from holding CITY OFFICE REIT or generate 28.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITY OFFICE REIT vs. Kaufman Broad SA
Performance |
| Timeline |
| CITY OFFICE REIT |
| Kaufman Broad SA |
CITY OFFICE and Kaufman Broad Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITY OFFICE and Kaufman Broad
The main advantage of trading using opposite CITY OFFICE and Kaufman Broad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITY OFFICE position performs unexpectedly, Kaufman Broad 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 Kaufman Broad will offset losses from the drop in Kaufman Broad's long position.| CITY OFFICE vs. Great Portland Estates | CITY OFFICE vs. Office Properties Income | CITY OFFICE vs. CREMECOMTRSBI DL 001 |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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