Correlation Between Brandywine Realty and FARO Technologies
Can any of the company-specific risk be diversified away by investing in both Brandywine Realty and FARO Technologies 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 FARO Technologies 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 FARO Technologies, you can compare the effects of market volatilities on Brandywine Realty and FARO Technologies 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 FARO Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brandywine Realty and FARO Technologies.
Diversification Opportunities for Brandywine Realty and FARO Technologies
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Brandywine and FARO is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Brandywine Realty Trust and FARO Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARO Technologies 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 FARO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARO Technologies has no effect on the direction of Brandywine Realty i.e., Brandywine Realty and FARO Technologies go up and down completely randomly.
Pair Corralation between Brandywine Realty and FARO Technologies
Considering the 90-day investment horizon Brandywine Realty is expected to generate 4.5 times less return on investment than FARO Technologies. But when comparing it to its historical volatility, Brandywine Realty Trust is 4.51 times less risky than FARO Technologies. It trades about 0.26 of its potential returns per unit of risk. FARO Technologies is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,769 in FARO Technologies on September 2, 2024 and sell it today you would earn a total of 856.00 from holding FARO Technologies or generate 48.39% 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. FARO Technologies
Performance |
| Timeline |
| Brandywine Realty Trust |
| FARO Technologies |
Brandywine Realty and FARO Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brandywine Realty and FARO Technologies
The main advantage of trading using opposite Brandywine Realty and FARO Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brandywine Realty position performs unexpectedly, FARO Technologies 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 FARO Technologies will offset losses from the drop in FARO Technologies' long position.| Brandywine Realty vs. Douglas Emmett | Brandywine Realty vs. Kilroy Realty Corp | Brandywine Realty vs. Piedmont Office Realty | Brandywine Realty vs. City Office |
| FARO Technologies vs. Coherent | FARO Technologies vs. ESCO Technologies | FARO Technologies vs. Mesa Laboratories | FARO Technologies vs. Vishay Precision Group |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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