Correlation Between CITY OFFICE and PPL
Can any of the company-specific risk be diversified away by investing in both CITY OFFICE and PPL 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 PPL 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 PPL Corporation, you can compare the effects of market volatilities on CITY OFFICE and PPL 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 PPL. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITY OFFICE and PPL.
Diversification Opportunities for CITY OFFICE and PPL
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CITY and PPL is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT and PPL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPL Corporation 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 PPL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPL Corporation has no effect on the direction of CITY OFFICE i.e., CITY OFFICE and PPL go up and down completely randomly.
Pair Corralation between CITY OFFICE and PPL
Assuming the 90 days horizon CITY OFFICE REIT is expected to generate 2.2 times more return on investment than PPL. However, CITY OFFICE is 2.2 times more volatile than PPL Corporation. It trades about 0.21 of its potential returns per unit of risk. PPL Corporation is currently generating about 0.26 per unit of risk. If you would invest 480.00 in CITY OFFICE REIT on August 30, 2024 and sell it today you would earn a total of 80.00 from holding CITY OFFICE REIT or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CITY OFFICE REIT vs. PPL Corp.
Performance |
| Timeline |
| CITY OFFICE REIT |
| PPL Corporation |
CITY OFFICE and PPL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITY OFFICE and PPL
The main advantage of trading using opposite CITY OFFICE and PPL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITY OFFICE position performs unexpectedly, PPL 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 PPL will offset losses from the drop in PPL's long position.| CITY OFFICE vs. National Retail Properties | CITY OFFICE vs. Safety Insurance Group | CITY OFFICE vs. BURLINGTON STORES | CITY OFFICE vs. Universal Insurance Holdings |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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