Correlation Between FARO Technologies and Brandywine Realty
Can any of the company-specific risk be diversified away by investing in both FARO Technologies and Brandywine Realty 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 FARO Technologies and Brandywine Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARO Technologies and Brandywine Realty Trust, you can compare the effects of market volatilities on FARO Technologies and Brandywine Realty 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 FARO Technologies with a short position of Brandywine Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARO Technologies and Brandywine Realty.
Diversification Opportunities for FARO Technologies and Brandywine Realty
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between FARO and Brandywine is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding FARO Technologies and Brandywine Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandywine Realty Trust and FARO Technologies 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 FARO Technologies are associated (or correlated) with Brandywine Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandywine Realty Trust has no effect on the direction of FARO Technologies i.e., FARO Technologies and Brandywine Realty go up and down completely randomly.
Pair Corralation between FARO Technologies and Brandywine Realty
Given the investment horizon of 90 days FARO Technologies is expected to generate 1.38 times more return on investment than Brandywine Realty. However, FARO Technologies is 1.38 times more volatile than Brandywine Realty Trust. It trades about 0.06 of its potential returns per unit of risk. Brandywine Realty Trust is currently generating about 0.06 per unit of risk. If you would invest 1,905 in FARO Technologies on September 4, 2024 and sell it today you would earn a total of 752.00 from holding FARO Technologies or generate 39.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARO Technologies vs. Brandywine Realty Trust
Performance |
| Timeline |
| FARO Technologies |
| Brandywine Realty Trust |
FARO Technologies and Brandywine Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARO Technologies and Brandywine Realty
The main advantage of trading using opposite FARO Technologies and Brandywine Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARO Technologies position performs unexpectedly, Brandywine Realty 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 Brandywine Realty will offset losses from the drop in Brandywine Realty's long position.| FARO Technologies vs. Coherent | FARO Technologies vs. ESCO Technologies | FARO Technologies vs. Mesa Laboratories | FARO Technologies vs. Vishay Precision Group |
| Brandywine Realty vs. Douglas Emmett | Brandywine Realty vs. Kilroy Realty Corp | Brandywine Realty vs. Piedmont Office Realty | Brandywine Realty vs. City Office |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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