Correlation Between Alstria Office and CITY OFFICE
Can any of the company-specific risk be diversified away by investing in both Alstria Office and CITY OFFICE 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 Alstria Office and CITY OFFICE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between alstria office REIT AG and CITY OFFICE REIT, you can compare the effects of market volatilities on Alstria Office and CITY OFFICE 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 Alstria Office with a short position of CITY OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alstria Office and CITY OFFICE.
Diversification Opportunities for Alstria Office and CITY OFFICE
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Alstria and CITY is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding alstria office REIT AG and CITY OFFICE REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITY OFFICE REIT and Alstria 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 alstria office REIT AG are associated (or correlated) with CITY OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITY OFFICE REIT has no effect on the direction of Alstria Office i.e., Alstria Office and CITY OFFICE go up and down completely randomly.
Pair Corralation between Alstria Office and CITY OFFICE
Assuming the 90 days horizon Alstria Office is expected to generate 1.16 times less return on investment than CITY OFFICE. But when comparing it to its historical volatility, alstria office REIT AG is 1.74 times less risky than CITY OFFICE. It trades about 0.25 of its potential returns per unit of risk. CITY OFFICE REIT is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 446.00 in CITY OFFICE REIT on September 21, 2024 and sell it today you would earn a total of 54.00 from holding CITY OFFICE REIT or generate 12.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
alstria office REIT AG vs. CITY OFFICE REIT
Performance |
| Timeline |
| alstria office REIT |
| CITY OFFICE REIT |
Alstria Office and CITY OFFICE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alstria Office and CITY OFFICE
The main advantage of trading using opposite Alstria Office and CITY OFFICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alstria Office position performs unexpectedly, CITY OFFICE 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 CITY OFFICE will offset losses from the drop in CITY OFFICE's long position.| Alstria Office vs. Ribbon Communications | Alstria Office vs. Live Nation Entertainment | Alstria Office vs. Cogent Communications Holdings | Alstria Office vs. Iridium Communications |
| CITY OFFICE vs. CREMECOMTRSBI DL 001 | CITY OFFICE vs. Superior Plus Corp | CITY OFFICE vs. SIVERS SEMICONDUCTORS AB | CITY OFFICE vs. Norsk Hydro ASA |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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