Correlation Between City Office and Vornado Realty
Can any of the company-specific risk be diversified away by investing in both City Office and Vornado Realty 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 Vornado Realty 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 Vornado Realty Trust, you can compare the effects of market volatilities on City Office and Vornado Realty 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 Vornado Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Office and Vornado Realty.
Diversification Opportunities for City Office and Vornado Realty
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between City and Vornado is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding City Office REIT and Vornado Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vornado Realty Trust 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 Vornado Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vornado Realty Trust has no effect on the direction of City Office i.e., City Office and Vornado Realty go up and down completely randomly.
Pair Corralation between City Office and Vornado Realty
Assuming the 90 days trading horizon City Office REIT is expected to generate 0.69 times more return on investment than Vornado Realty. However, City Office REIT is 1.44 times less risky than Vornado Realty. It trades about 0.09 of its potential returns per unit of risk. Vornado Realty Trust is currently generating about -0.08 per unit of risk. If you would invest 1,830 in City Office REIT on November 18, 2024 and sell it today you would earn a total of 30.00 from holding City Office REIT or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
City Office REIT vs. Vornado Realty Trust
Performance |
| Timeline |
| City Office REIT |
| Vornado Realty Trust |
City Office and Vornado Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Office and Vornado Realty
The main advantage of trading using opposite City Office and Vornado Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Office position performs unexpectedly, Vornado Realty 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 Vornado Realty will offset losses from the drop in Vornado Realty'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 |
| Vornado Realty vs. Vornado Realty Trust | Vornado Realty vs. Vornado Realty Trust | Vornado Realty vs. Vornado Realty Trust | Vornado Realty vs. Hudson Pacific Properties |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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