Correlation Between CITY OFFICE and Great Portland
Can any of the company-specific risk be diversified away by investing in both CITY OFFICE and Great Portland 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 Great Portland 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 Great Portland Estates, you can compare the effects of market volatilities on CITY OFFICE and Great Portland 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 Great Portland. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITY OFFICE and Great Portland.
Diversification Opportunities for CITY OFFICE and Great Portland
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CITY and Great is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT and Great Portland Estates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Portland Estates 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 Great Portland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Portland Estates has no effect on the direction of CITY OFFICE i.e., CITY OFFICE and Great Portland go up and down completely randomly.
Pair Corralation between CITY OFFICE and Great Portland
Assuming the 90 days horizon CITY OFFICE REIT is expected to generate 1.25 times more return on investment than Great Portland. However, CITY OFFICE is 1.25 times more volatile than Great Portland Estates. It trades about -0.01 of its potential returns per unit of risk. Great Portland Estates is currently generating about -0.03 per unit of risk. If you would invest 722.00 in CITY OFFICE REIT on November 6, 2024 and sell it today you would lose (217.00) from holding CITY OFFICE REIT or give up 30.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITY OFFICE REIT vs. Great Portland Estates
Performance |
| Timeline |
| CITY OFFICE REIT |
| Great Portland Estates |
CITY OFFICE and Great Portland Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITY OFFICE and Great Portland
The main advantage of trading using opposite CITY OFFICE and Great Portland positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITY OFFICE position performs unexpectedly, Great Portland 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 Great Portland will offset losses from the drop in Great Portland's long position.| CITY OFFICE vs. Siamgas And Petrochemicals | CITY OFFICE vs. AIR PRODCHEMICALS | CITY OFFICE vs. Summit Hotel Properties | CITY OFFICE vs. X FAB Silicon Foundries |
| Great Portland vs. Boston Properties | Great Portland vs. Easterly Government Properties | Great Portland vs. Office Properties Income | Great Portland vs. CITY OFFICE REIT |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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