Correlation Between CITY OFFICE and American International
Can any of the company-specific risk be diversified away by investing in both CITY OFFICE and American International 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 American International 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 American International Group, you can compare the effects of market volatilities on CITY OFFICE and American International 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 American International. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITY OFFICE and American International.
Diversification Opportunities for CITY OFFICE and American International
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between CITY and American is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT and American International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American International 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 American International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American International has no effect on the direction of CITY OFFICE i.e., CITY OFFICE and American International go up and down completely randomly.
Pair Corralation between CITY OFFICE and American International
Assuming the 90 days horizon CITY OFFICE REIT is expected to generate 2.93 times more return on investment than American International. However, CITY OFFICE is 2.93 times more volatile than American International Group. It trades about 0.23 of its potential returns per unit of risk. American International Group is currently generating about -0.03 per unit of risk. If you would invest 462.00 in CITY OFFICE REIT on September 13, 2024 and sell it today you would earn a total of 78.00 from holding CITY OFFICE REIT or generate 16.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITY OFFICE REIT vs. American International Group
Performance |
| Timeline |
| CITY OFFICE REIT |
| American International |
CITY OFFICE and American International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITY OFFICE and American International
The main advantage of trading using opposite CITY OFFICE and American International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITY OFFICE position performs unexpectedly, American International 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 American International will offset losses from the drop in American International's long position.| CITY OFFICE vs. Office Properties Income | CITY OFFICE vs. CREMECOMTRSBI DL 001 | CITY OFFICE vs. Superior Plus Corp | CITY OFFICE vs. SIVERS SEMICONDUCTORS AB |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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