Correlation Between DFS Furniture and CITY OFFICE
Can any of the company-specific risk be diversified away by investing in both DFS Furniture and CITY 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 DFS Furniture and CITY OFFICE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFS Furniture PLC and CITY OFFICE REIT, you can compare the effects of market volatilities on DFS Furniture and CITY 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 DFS Furniture with a short position of CITY OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and CITY OFFICE.
Diversification Opportunities for DFS Furniture and CITY OFFICE
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DFS and CITY is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and CITY OFFICE REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITY OFFICE REIT and DFS Furniture 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 DFS Furniture PLC are associated (or correlated) with CITY OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITY OFFICE REIT has no effect on the direction of DFS Furniture i.e., DFS Furniture and CITY OFFICE go up and down completely randomly.
Pair Corralation between DFS Furniture and CITY OFFICE
Assuming the 90 days trading horizon DFS Furniture PLC is expected to generate 0.8 times more return on investment than CITY OFFICE. However, DFS Furniture PLC is 1.26 times less risky than CITY OFFICE. It trades about 0.01 of its potential returns per unit of risk. CITY OFFICE REIT is currently generating about 0.0 per unit of risk. If you would invest 163.00 in DFS Furniture PLC on September 2, 2024 and sell it today you would lose (1.00) from holding DFS Furniture PLC or give up 0.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFS Furniture PLC vs. CITY OFFICE REIT
Performance |
| Timeline |
| DFS Furniture PLC |
| CITY OFFICE REIT |
DFS Furniture and CITY OFFICE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and CITY OFFICE
The main advantage of trading using opposite DFS Furniture and CITY OFFICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture position performs unexpectedly, CITY 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 CITY OFFICE will offset losses from the drop in CITY OFFICE's long position.| DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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