Correlation Between Canadian Apartment and Slate Office
Can any of the company-specific risk be diversified away by investing in both Canadian Apartment and Slate 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 Canadian Apartment and Slate Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Apartment Properties and Slate Office REIT, you can compare the effects of market volatilities on Canadian Apartment and Slate 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 Canadian Apartment with a short position of Slate Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Apartment and Slate Office.
Diversification Opportunities for Canadian Apartment and Slate Office
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Canadian and Slate is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Apartment Properties and Slate Office REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Slate Office REIT and Canadian Apartment 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 Canadian Apartment Properties are associated (or correlated) with Slate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Slate Office REIT has no effect on the direction of Canadian Apartment i.e., Canadian Apartment and Slate Office go up and down completely randomly.
Pair Corralation between Canadian Apartment and Slate Office
Assuming the 90 days trading horizon Canadian Apartment Properties is expected to generate 0.25 times more return on investment than Slate Office. However, Canadian Apartment Properties is 4.08 times less risky than Slate Office. It trades about -0.31 of its potential returns per unit of risk. Slate Office REIT is currently generating about -0.27 per unit of risk. If you would invest 5,119 in Canadian Apartment Properties on September 13, 2024 and sell it today you would lose (687.00) from holding Canadian Apartment Properties or give up 13.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Apartment Properties vs. Slate Office REIT
Performance |
| Timeline |
| Canadian Apartment |
| Slate Office REIT |
Canadian Apartment and Slate Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Apartment and Slate Office
The main advantage of trading using opposite Canadian Apartment and Slate Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Apartment position performs unexpectedly, Slate 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 Slate Office will offset losses from the drop in Slate Office's long position.| Canadian Apartment vs. Allied Properties Real | Canadian Apartment vs. Granite Real Estate | Canadian Apartment vs. Boardwalk Real Estate | Canadian Apartment vs. HR Real Estate |
| Slate Office vs. Canadian Apartment Properties | Slate Office vs. Granite Real Estate | Slate Office vs. Choice Properties Real | Slate 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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