Correlation Between CITY OFFICE and Evonik Industries
Can any of the company-specific risk be diversified away by investing in both CITY OFFICE and Evonik Industries 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 Evonik Industries 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 Evonik Industries AG, you can compare the effects of market volatilities on CITY OFFICE and Evonik Industries 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 Evonik Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITY OFFICE and Evonik Industries.
Diversification Opportunities for CITY OFFICE and Evonik Industries
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CITY and Evonik is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT and Evonik Industries AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evonik Industries 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 Evonik Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evonik Industries has no effect on the direction of CITY OFFICE i.e., CITY OFFICE and Evonik Industries go up and down completely randomly.
Pair Corralation between CITY OFFICE and Evonik Industries
Assuming the 90 days horizon CITY OFFICE REIT is expected to under-perform the Evonik Industries. In addition to that, CITY OFFICE is 2.51 times more volatile than Evonik Industries AG. It trades about 0.0 of its total potential returns per unit of risk. Evonik Industries AG is currently generating about 0.0 per unit of volatility. If you would invest 1,738 in Evonik Industries AG on October 7, 2024 and sell it today you would lose (86.00) from holding Evonik Industries AG or give up 4.95% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITY OFFICE REIT vs. Evonik Industries AG
Performance |
| Timeline |
| CITY OFFICE REIT |
| Evonik Industries |
CITY OFFICE and Evonik Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITY OFFICE and Evonik Industries
The main advantage of trading using opposite CITY OFFICE and Evonik Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITY OFFICE position performs unexpectedly, Evonik Industries 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 Evonik Industries will offset losses from the drop in Evonik Industries' 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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