Correlation Between City Office and Capital Clean
Can any of the company-specific risk be diversified away by investing in both City Office and Capital Clean 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 City Office and Capital Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Office REIT and Capital Clean Energy, you can compare the effects of market volatilities on City Office and Capital Clean 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 City Office with a short position of Capital Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Office and Capital Clean.
Diversification Opportunities for City Office and Capital Clean
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between City and Capital is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding City Office REIT and Capital Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Clean Energy and City 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 City Office REIT are associated (or correlated) with Capital Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Clean Energy has no effect on the direction of City Office i.e., City Office and Capital Clean go up and down completely randomly.
Pair Corralation between City Office and Capital Clean
Assuming the 90 days trading horizon City Office REIT is expected to under-perform the Capital Clean. But the preferred stock apears to be less risky and, when comparing its historical volatility, City Office REIT is 1.08 times less risky than Capital Clean. The preferred stock trades about -0.28 of its potential returns per unit of risk. The Capital Clean Energy is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,850 in Capital Clean Energy on November 8, 2024 and sell it today you would earn a total of 51.00 from holding Capital Clean Energy or generate 2.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
City Office REIT vs. Capital Clean Energy
Performance |
| Timeline |
| City Office REIT |
| Capital Clean Energy |
City Office and Capital Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Office and Capital Clean
The main advantage of trading using opposite City Office and Capital Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Office position performs unexpectedly, Capital Clean 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 Capital Clean will offset losses from the drop in Capital Clean's long position.| City Office vs. Aptiv PLC | City Office vs. Nicola Mining | City Office vs. Tesla Inc | City Office vs. Highway Holdings Limited |
| Capital Clean vs. Chester Mining | Capital Clean vs. Braemar Hotels Resorts | Capital Clean vs. Harmony Gold Mining | Capital Clean vs. Sweetgreen |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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