Correlation Between Allied Properties and Dream Office
Can any of the company-specific risk be diversified away by investing in both Allied Properties and Dream 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 Allied Properties and Dream Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allied Properties Real and Dream Office Real, you can compare the effects of market volatilities on Allied Properties and Dream 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 Allied Properties with a short position of Dream Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allied Properties and Dream Office.
Diversification Opportunities for Allied Properties and Dream Office
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Allied and Dream is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Allied Properties Real and Dream Office Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Office Real and Allied Properties 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 Allied Properties Real are associated (or correlated) with Dream Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Office Real has no effect on the direction of Allied Properties i.e., Allied Properties and Dream Office go up and down completely randomly.
Pair Corralation between Allied Properties and Dream Office
Assuming the 90 days trading horizon Allied Properties is expected to generate 2.25 times less return on investment than Dream Office. But when comparing it to its historical volatility, Allied Properties Real is 1.52 times less risky than Dream Office. It trades about 0.04 of its potential returns per unit of risk. Dream Office Real is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,572 in Dream Office Real on August 25, 2024 and sell it today you would earn a total of 330.00 from holding Dream Office Real or generate 20.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allied Properties Real vs. Dream Office Real
Performance |
| Timeline |
| Allied Properties Real |
| Dream Office Real |
Allied Properties and Dream Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allied Properties and Dream Office
The main advantage of trading using opposite Allied Properties and Dream Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allied Properties position performs unexpectedly, Dream 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 Dream Office will offset losses from the drop in Dream Office's long position.| Allied Properties vs. Canadian Apartment Properties | Allied Properties vs. Granite Real Estate | Allied Properties vs. Choice Properties Real | Allied Properties vs. HR Real Estate |
| Dream Office vs. Artis Real Estate | Dream Office vs. Boardwalk Real Estate | Dream Office vs. Allied Properties Real | Dream Office vs. HR Real Estate |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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