Correlation Between DEUTSCHE WOHNEN and CITY OFFICE
Can any of the company-specific risk be diversified away by investing in both DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN and CITY OFFICE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DEUTSCHE WOHNEN ADRS12 and CITY OFFICE REIT, you can compare the effects of market volatilities on DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN with a short position of CITY OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of DEUTSCHE WOHNEN and CITY OFFICE.
Diversification Opportunities for DEUTSCHE WOHNEN and CITY OFFICE
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between DEUTSCHE and CITY is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding DEUTSCHE WOHNEN ADRS12 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 DEUTSCHE WOHNEN 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 DEUTSCHE WOHNEN ADRS12 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 DEUTSCHE WOHNEN i.e., DEUTSCHE WOHNEN and CITY OFFICE go up and down completely randomly.
Pair Corralation between DEUTSCHE WOHNEN and CITY OFFICE
Assuming the 90 days trading horizon DEUTSCHE WOHNEN ADRS12 is expected to under-perform the CITY OFFICE. But the stock apears to be less risky and, when comparing its historical volatility, DEUTSCHE WOHNEN ADRS12 is 1.36 times less risky than CITY OFFICE. The stock trades about -0.07 of its potential returns per unit of risk. The CITY OFFICE REIT is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 471.00 in CITY OFFICE REIT on October 14, 2024 and sell it today you would earn a total of 34.00 from holding CITY OFFICE REIT or generate 7.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DEUTSCHE WOHNEN ADRS12 vs. CITY OFFICE REIT
Performance |
| Timeline |
| DEUTSCHE WOHNEN ADRS12 |
| CITY OFFICE REIT |
DEUTSCHE WOHNEN and CITY OFFICE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DEUTSCHE WOHNEN and CITY OFFICE
The main advantage of trading using opposite DEUTSCHE WOHNEN and CITY OFFICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DEUTSCHE WOHNEN 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.| DEUTSCHE WOHNEN vs. CITY OFFICE REIT | DEUTSCHE WOHNEN vs. URBAN OUTFITTERS | DEUTSCHE WOHNEN vs. Shenandoah Telecommunications | DEUTSCHE WOHNEN vs. 24SEVENOFFICE GROUP AB |
| CITY OFFICE vs. GEELY AUTOMOBILE | CITY OFFICE vs. Summit Materials | CITY OFFICE vs. NEWELL RUBBERMAID | CITY OFFICE vs. Materialise NV |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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