Correlation Between Brandywine Realty and City Office
Can any of the company-specific risk be diversified away by investing in both Brandywine Realty 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 Brandywine Realty and City Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brandywine Realty Trust and City Office REIT, you can compare the effects of market volatilities on Brandywine Realty 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 Brandywine Realty with a short position of City Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandywine Realty and City Office.
Diversification Opportunities for Brandywine Realty and City Office
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Brandywine and City is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Brandywine Realty Trust 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 Brandywine Realty 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 Brandywine Realty Trust 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 Brandywine Realty i.e., Brandywine Realty and City Office go up and down completely randomly.
Pair Corralation between Brandywine Realty and City Office
Considering the 90-day investment horizon Brandywine Realty Trust is expected to generate 1.33 times more return on investment than City Office. However, Brandywine Realty is 1.33 times more volatile than City Office REIT. It trades about 0.12 of its potential returns per unit of risk. City Office REIT is currently generating about 0.15 per unit of risk. If you would invest 532.00 in Brandywine Realty Trust on August 27, 2024 and sell it today you would earn a total of 23.00 from holding Brandywine Realty Trust or generate 4.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brandywine Realty Trust vs. City Office REIT
Performance |
| Timeline |
| Brandywine Realty Trust |
| City Office REIT |
Brandywine Realty and City Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brandywine Realty and City Office
The main advantage of trading using opposite Brandywine Realty and City Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandywine Realty 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.| Brandywine Realty vs. Douglas Emmett | Brandywine Realty vs. Kilroy Realty Corp | Brandywine Realty vs. Piedmont Office Realty | Brandywine Realty vs. City Office |
| City Office vs. Cousins Properties Incorporated | City Office vs. Franklin Street Properties | City Office vs. Creative Media Community | City Office vs. Vornado Realty Trust |
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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