Correlation Between City Office and SL Green
Can any of the company-specific risk be diversified away by investing in both City Office and SL Green 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 SL Green 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 SL Green Realty, you can compare the effects of market volatilities on City Office and SL Green 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 SL Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Office and SL Green.
Diversification Opportunities for City Office and SL Green
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between City and SLG-PI is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding City Office REIT and SL Green Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SL Green Realty 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 SL Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SL Green Realty has no effect on the direction of City Office i.e., City Office and SL Green go up and down completely randomly.
Pair Corralation between City Office and SL Green
Assuming the 90 days trading horizon City Office REIT is expected to under-perform the SL Green. In addition to that, City Office is 1.34 times more volatile than SL Green Realty. It trades about -0.36 of its total potential returns per unit of risk. SL Green Realty is currently generating about -0.04 per unit of volatility. If you would invest 2,375 in SL Green Realty on November 3, 2024 and sell it today you would lose (20.00) from holding SL Green Realty or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
City Office REIT vs. SL Green Realty
Performance |
| Timeline |
| City Office REIT |
| SL Green Realty |
City Office and SL Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Office and SL Green
The main advantage of trading using opposite City Office and SL Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Office position performs unexpectedly, SL Green 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 SL Green will offset losses from the drop in SL Green'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 |
| SL Green vs. Vornado Realty Trust | SL Green vs. Vornado Realty Trust | SL Green vs. City Office REIT | SL Green 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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