Correlation Between CITY OFFICE and Illinois Tool
Can any of the company-specific risk be diversified away by investing in both CITY OFFICE and Illinois Tool 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 Illinois Tool 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 Illinois Tool Works, you can compare the effects of market volatilities on CITY OFFICE and Illinois Tool 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 Illinois Tool. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITY OFFICE and Illinois Tool.
Diversification Opportunities for CITY OFFICE and Illinois Tool
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CITY and Illinois is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT and Illinois Tool Works in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illinois Tool Works 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 Illinois Tool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illinois Tool Works has no effect on the direction of CITY OFFICE i.e., CITY OFFICE and Illinois Tool go up and down completely randomly.
Pair Corralation between CITY OFFICE and Illinois Tool
Assuming the 90 days horizon CITY OFFICE REIT is expected to generate 2.84 times more return on investment than Illinois Tool. However, CITY OFFICE is 2.84 times more volatile than Illinois Tool Works. It trades about -0.13 of its potential returns per unit of risk. Illinois Tool Works is currently generating about -0.52 per unit of risk. If you would invest 534.00 in CITY OFFICE REIT on October 16, 2024 and sell it today you would lose (29.00) from holding CITY OFFICE REIT or give up 5.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITY OFFICE REIT vs. Illinois Tool Works
Performance |
| Timeline |
| CITY OFFICE REIT |
| Illinois Tool Works |
CITY OFFICE and Illinois Tool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITY OFFICE and Illinois Tool
The main advantage of trading using opposite CITY OFFICE and Illinois Tool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITY OFFICE position performs unexpectedly, Illinois Tool 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 Illinois Tool will offset losses from the drop in Illinois Tool's long position.| CITY OFFICE vs. Alfa Financial Software | CITY OFFICE vs. Bio Techne Corp | CITY OFFICE vs. OPERA SOFTWARE | CITY OFFICE vs. GBS Software AG |
| Illinois Tool vs. CITY OFFICE REIT | Illinois Tool vs. GAMESTOP | Illinois Tool vs. CENTURIA OFFICE REIT | Illinois Tool vs. NURAN WIRELESS INC |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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