Correlation Between DFS Furniture and Corporate Office
Can any of the company-specific risk be diversified away by investing in both DFS Furniture and Corporate 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 Corporate 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 Corporate Office Properties, you can compare the effects of market volatilities on DFS Furniture and Corporate 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 Corporate Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFS Furniture and Corporate Office.
Diversification Opportunities for DFS Furniture and Corporate Office
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DFS and Corporate is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding DFS Furniture PLC and Corporate Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Office Pro 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 Corporate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Office Pro has no effect on the direction of DFS Furniture i.e., DFS Furniture and Corporate Office go up and down completely randomly.
Pair Corralation between DFS Furniture and Corporate Office
Assuming the 90 days trading horizon DFS Furniture is expected to generate 1.16 times less return on investment than Corporate Office. In addition to that, DFS Furniture is 1.26 times more volatile than Corporate Office Properties. It trades about 0.11 of its total potential returns per unit of risk. Corporate Office Properties is currently generating about 0.16 per unit of volatility. If you would invest 2,920 in Corporate Office Properties on September 1, 2024 and sell it today you would earn a total of 160.00 from holding Corporate Office Properties or generate 5.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DFS Furniture PLC vs. Corporate Office Properties
Performance |
| Timeline |
| DFS Furniture PLC |
| Corporate Office Pro |
DFS Furniture and Corporate Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DFS Furniture and Corporate Office
The main advantage of trading using opposite DFS Furniture and Corporate Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFS Furniture position performs unexpectedly, Corporate 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 Corporate Office will offset losses from the drop in Corporate Office's long position.| DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc |
| Corporate Office vs. Clean Energy Fuels | Corporate Office vs. BJs Restaurants | Corporate Office vs. FRACTAL GAMING GROUP | Corporate Office vs. ANGLER GAMING PLC |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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