Correlation Between City Office and Piedmont Office
Can any of the company-specific risk be diversified away by investing in both City Office and Piedmont Office 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 Piedmont Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Office and Piedmont Office Realty, you can compare the effects of market volatilities on City Office and Piedmont Office 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 Piedmont Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Office and Piedmont Office.
Diversification Opportunities for City Office and Piedmont Office
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between City and Piedmont is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding City Office and Piedmont Office Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piedmont Office 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 are associated (or correlated) with Piedmont Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piedmont Office Realty has no effect on the direction of City Office i.e., City Office and Piedmont Office go up and down completely randomly.
Pair Corralation between City Office and Piedmont Office
Considering the 90-day investment horizon City Office is expected to generate 1.75 times more return on investment than Piedmont Office. However, City Office is 1.75 times more volatile than Piedmont Office Realty. It trades about -0.06 of its potential returns per unit of risk. Piedmont Office Realty is currently generating about -0.18 per unit of risk. If you would invest 549.00 in City Office on August 27, 2024 and sell it today you would lose (20.00) from holding City Office or give up 3.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
City Office vs. Piedmont Office Realty
Performance |
| Timeline |
| City Office |
| Piedmont Office Realty |
City Office and Piedmont Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Office and Piedmont Office
The main advantage of trading using opposite City Office and Piedmont Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Office position performs unexpectedly, Piedmont Office 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 Piedmont Office will offset losses from the drop in Piedmont Office'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 |
| Piedmont Office vs. Highwoods Properties | Piedmont Office vs. Douglas Emmett | Piedmont Office vs. Kilroy Realty Corp | Piedmont Office vs. Cousins Properties Incorporated |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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