Correlation Between CITY OFFICE and ESSILORLUXOTTICA
Can any of the company-specific risk be diversified away by investing in both CITY OFFICE and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA 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 ESSILORLUXOTTICA 12ON, you can compare the effects of market volatilities on CITY OFFICE and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITY OFFICE and ESSILORLUXOTTICA.
Diversification Opportunities for CITY OFFICE and ESSILORLUXOTTICA
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CITY and ESSILORLUXOTTICA is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT and ESSILORLUXOTTICA 12ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ESSILORLUXOTTICA 12ON 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 ESSILORLUXOTTICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ESSILORLUXOTTICA 12ON has no effect on the direction of CITY OFFICE i.e., CITY OFFICE and ESSILORLUXOTTICA go up and down completely randomly.
Pair Corralation between CITY OFFICE and ESSILORLUXOTTICA
Assuming the 90 days horizon CITY OFFICE is expected to generate 2.05 times less return on investment than ESSILORLUXOTTICA. In addition to that, CITY OFFICE is 2.15 times more volatile than ESSILORLUXOTTICA 12ON. It trades about 0.04 of its total potential returns per unit of risk. ESSILORLUXOTTICA 12ON is currently generating about 0.16 per unit of volatility. If you would invest 10,200 in ESSILORLUXOTTICA 12ON on November 3, 2024 and sell it today you would earn a total of 3,000 from holding ESSILORLUXOTTICA 12ON or generate 29.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITY OFFICE REIT vs. ESSILORLUXOTTICA 12ON
Performance |
| Timeline |
| CITY OFFICE REIT |
| ESSILORLUXOTTICA 12ON |
CITY OFFICE and ESSILORLUXOTTICA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITY OFFICE and ESSILORLUXOTTICA
The main advantage of trading using opposite CITY OFFICE and ESSILORLUXOTTICA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITY OFFICE position performs unexpectedly, ESSILORLUXOTTICA 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 ESSILORLUXOTTICA will offset losses from the drop in ESSILORLUXOTTICA's long position.| CITY OFFICE vs. Charter Communications | CITY OFFICE vs. MidCap Financial Investment | CITY OFFICE vs. Keck Seng Investments | CITY OFFICE vs. HK Electric Investments |
| ESSILORLUXOTTICA vs. American Airlines Group | ESSILORLUXOTTICA vs. United Airlines Holdings | ESSILORLUXOTTICA vs. Extra Space Storage | ESSILORLUXOTTICA vs. CN DATANG C |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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