Correlation Between City Office and Creative Media
Can any of the company-specific risk be diversified away by investing in both City Office and Creative Media 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 Creative Media 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 Creative Media Community, you can compare the effects of market volatilities on City Office and Creative Media 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 Creative Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Office and Creative Media.
Diversification Opportunities for City Office and Creative Media
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between City and Creative is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding City Office REIT and Creative Media Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creative Media Community 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 Creative Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creative Media Community has no effect on the direction of City Office i.e., City Office and Creative Media go up and down completely randomly.
Pair Corralation between City Office and Creative Media
Assuming the 90 days trading horizon City Office REIT is expected to generate 0.26 times more return on investment than Creative Media. However, City Office REIT is 3.85 times less risky than Creative Media. It trades about 0.07 of its potential returns per unit of risk. Creative Media Community is currently generating about -0.15 per unit of risk. If you would invest 1,503 in City Office REIT on August 24, 2024 and sell it today you would earn a total of 371.00 from holding City Office REIT or generate 24.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
City Office REIT vs. Creative Media Community
Performance |
| Timeline |
| City Office REIT |
| Creative Media Community |
City Office and Creative Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Office and Creative Media
The main advantage of trading using opposite City Office and Creative Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Office position performs unexpectedly, Creative Media 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 Creative Media will offset losses from the drop in Creative Media's long position.| City Office vs. Vornado Realty Trust | City Office vs. Vornado Realty Trust | City Office vs. SL Green Realty | City Office vs. Hudson Pacific Properties |
| Creative Media vs. Cousins Properties Incorporated | Creative Media vs. Highwoods Properties | Creative Media vs. Douglas Emmett | Creative Media vs. Equity Commonwealth |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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