Correlation Between City Office and COPT Defense
Can any of the company-specific risk be diversified away by investing in both City Office and COPT Defense 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 COPT Defense into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Office and COPT Defense Properties, you can compare the effects of market volatilities on City Office and COPT Defense 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 COPT Defense. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Office and COPT Defense.
Diversification Opportunities for City Office and COPT Defense
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between City and COPT is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding City Office and COPT Defense Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COPT Defense Properties 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 are associated (or correlated) with COPT Defense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COPT Defense Properties has no effect on the direction of City Office i.e., City Office and COPT Defense go up and down completely randomly.
Pair Corralation between City Office and COPT Defense
Considering the 90-day investment horizon City Office is expected to under-perform the COPT Defense. In addition to that, City Office is 2.18 times more volatile than COPT Defense Properties. It trades about -0.01 of its total potential returns per unit of risk. COPT Defense Properties is currently generating about 0.03 per unit of volatility. If you would invest 2,320 in COPT Defense Properties on November 19, 2024 and sell it today you would earn a total of 408.00 from holding COPT Defense Properties or generate 17.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
City Office vs. COPT Defense Properties
Performance |
| Timeline |
| City Office |
| COPT Defense Properties |
City Office and COPT Defense Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Office and COPT Defense
The main advantage of trading using opposite City Office and COPT Defense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Office position performs unexpectedly, COPT Defense 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 COPT Defense will offset losses from the drop in COPT Defense's long position.| City Office vs. Hudson Pacific Properties | City Office vs. Piedmont Office Realty | City Office vs. Office Properties Income | City Office vs. Kilroy Realty Corp |
| COPT Defense vs. LAir Liquide SA | COPT Defense vs. Corsair Gaming | COPT Defense vs. Westrock Coffee | COPT Defense vs. Diageo PLC ADR |
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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