Correlation Between Global Medical and City Office
Can any of the company-specific risk be diversified away by investing in both Global Medical 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 Global Medical and City Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Medical REIT and City Office REIT, you can compare the effects of market volatilities on Global Medical 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 Global Medical with a short position of City Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Medical and City Office.
Diversification Opportunities for Global Medical and City Office
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and City is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Global Medical REIT 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 Global Medical 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 Global Medical REIT 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 Global Medical i.e., Global Medical and City Office go up and down completely randomly.
Pair Corralation between Global Medical and City Office
Assuming the 90 days trading horizon Global Medical is expected to generate 3.08 times less return on investment than City Office. But when comparing it to its historical volatility, Global Medical REIT is 1.51 times less risky than City Office. It trades about 0.03 of its potential returns per unit of risk. City Office REIT is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,839 in City Office REIT on August 24, 2024 and sell it today you would earn a total of 35.00 from holding City Office REIT or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Medical REIT vs. City Office REIT
Performance |
| Timeline |
| Global Medical REIT |
| City Office REIT |
Global Medical and City Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Medical and City Office
The main advantage of trading using opposite Global Medical and City Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Medical 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.| Global Medical vs. Global Medical REIT | Global Medical vs. Community Healthcare Trust | Global Medical vs. National Health Investors | Global Medical vs. Healthcare Realty Trust |
| City Office vs. Vornado Realty Trust | City Office vs. Vornado Realty Trust | City Office vs. SL Green Realty | City Office vs. Hudson Pacific Properties |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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