Correlation Between Dream Industrial and Dream Office
Can any of the company-specific risk be diversified away by investing in both Dream Industrial and Dream 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 Dream Industrial and Dream Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dream Industrial Real and Dream Office Real, you can compare the effects of market volatilities on Dream Industrial and Dream 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 Dream Industrial with a short position of Dream Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Industrial and Dream Office.
Diversification Opportunities for Dream Industrial and Dream Office
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dream and Dream is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dream Industrial Real and Dream Office Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Office Real and Dream Industrial 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 Dream Industrial Real are associated (or correlated) with Dream Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Office Real has no effect on the direction of Dream Industrial i.e., Dream Industrial and Dream Office go up and down completely randomly.
Pair Corralation between Dream Industrial and Dream Office
Assuming the 90 days trading horizon Dream Industrial is expected to generate 6.95 times less return on investment than Dream Office. But when comparing it to its historical volatility, Dream Industrial Real is 1.96 times less risky than Dream Office. It trades about 0.0 of its potential returns per unit of risk. Dream Office Real is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,904 in Dream Office Real on September 3, 2024 and sell it today you would earn a total of 14.00 from holding Dream Office Real or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dream Industrial Real vs. Dream Office Real
Performance |
| Timeline |
| Dream Industrial Real |
| Dream Office Real |
Dream Industrial and Dream Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Industrial and Dream Office
The main advantage of trading using opposite Dream Industrial and Dream Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Industrial position performs unexpectedly, Dream 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 Dream Office will offset losses from the drop in Dream Office's long position.| Dream Industrial vs. Granite Real Estate | Dream Industrial vs. NorthWest Healthcare Properties | Dream Industrial vs. Choice Properties Real | Dream Industrial vs. Canadian Apartment Properties |
| Dream Office vs. KDA Group | Dream Office vs. BMO Aggregate Bond | Dream Office vs. Terreno Resources Corp | Dream Office vs. iShares Canadian HYBrid |
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 Stocks Directory module to find actively traded stocks across global markets.
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