Correlation Between CITY OFFICE and SWISS WATER
Can any of the company-specific risk be diversified away by investing in both CITY OFFICE and SWISS WATER 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 SWISS WATER 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 SWISS WATER DECAFFCOFFEE, you can compare the effects of market volatilities on CITY OFFICE and SWISS WATER 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 SWISS WATER. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITY OFFICE and SWISS WATER.
Diversification Opportunities for CITY OFFICE and SWISS WATER
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CITY and SWISS is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT and SWISS WATER DECAFFCOFFEE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWISS WATER DECAFFCOFFEE 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 SWISS WATER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWISS WATER DECAFFCOFFEE has no effect on the direction of CITY OFFICE i.e., CITY OFFICE and SWISS WATER go up and down completely randomly.
Pair Corralation between CITY OFFICE and SWISS WATER
Assuming the 90 days horizon CITY OFFICE is expected to generate 8.29 times less return on investment than SWISS WATER. But when comparing it to its historical volatility, CITY OFFICE REIT is 1.03 times less risky than SWISS WATER. It trades about 0.02 of its potential returns per unit of risk. SWISS WATER DECAFFCOFFEE is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 236.00 in SWISS WATER DECAFFCOFFEE on August 28, 2024 and sell it today you would earn a total of 36.00 from holding SWISS WATER DECAFFCOFFEE or generate 15.25% 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. SWISS WATER DECAFFCOFFEE
Performance |
| Timeline |
| CITY OFFICE REIT |
| SWISS WATER DECAFFCOFFEE |
CITY OFFICE and SWISS WATER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITY OFFICE and SWISS WATER
The main advantage of trading using opposite CITY OFFICE and SWISS WATER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITY OFFICE position performs unexpectedly, SWISS WATER 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 SWISS WATER will offset losses from the drop in SWISS WATER's long position.| CITY OFFICE vs. HK Electric Investments | CITY OFFICE vs. SLR Investment Corp | CITY OFFICE vs. National Beverage Corp | CITY OFFICE vs. REINET INVESTMENTS SCA |
| SWISS WATER vs. RYU Apparel | SWISS WATER vs. New Residential Investment | SWISS WATER vs. American Eagle Outfitters | SWISS WATER vs. PennyMac Mortgage Investment |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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