Correlation Between CITY OFFICE and Rheinmetall
Can any of the company-specific risk be diversified away by investing in both CITY OFFICE and Rheinmetall 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 Rheinmetall 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 Rheinmetall AG, you can compare the effects of market volatilities on CITY OFFICE and Rheinmetall 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 Rheinmetall. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITY OFFICE and Rheinmetall.
Diversification Opportunities for CITY OFFICE and Rheinmetall
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CITY and Rheinmetall is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT and Rheinmetall AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rheinmetall AG 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 Rheinmetall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rheinmetall AG has no effect on the direction of CITY OFFICE i.e., CITY OFFICE and Rheinmetall go up and down completely randomly.
Pair Corralation between CITY OFFICE and Rheinmetall
Assuming the 90 days horizon CITY OFFICE REIT is expected to under-perform the Rheinmetall. In addition to that, CITY OFFICE is 2.14 times more volatile than Rheinmetall AG. It trades about -0.04 of its total potential returns per unit of risk. Rheinmetall AG is currently generating about 0.76 per unit of volatility. If you would invest 60,520 in Rheinmetall AG on November 6, 2024 and sell it today you would earn a total of 15,040 from holding Rheinmetall AG or generate 24.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
CITY OFFICE REIT vs. Rheinmetall AG
Performance |
| Timeline |
| CITY OFFICE REIT |
| Rheinmetall AG |
CITY OFFICE and Rheinmetall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CITY OFFICE and Rheinmetall
The main advantage of trading using opposite CITY OFFICE and Rheinmetall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITY OFFICE position performs unexpectedly, Rheinmetall 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 Rheinmetall will offset losses from the drop in Rheinmetall'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 |
| Rheinmetall vs. Verizon Communications | Rheinmetall vs. TELECOM ITALIA | Rheinmetall vs. AEGEAN AIRLINES | Rheinmetall vs. Southwest Airlines Co |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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