Correlation Between Covivio and Firm Capital
Can any of the company-specific risk be diversified away by investing in both Covivio and Firm Capital 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 Covivio and Firm Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Covivio and Firm Capital Property, you can compare the effects of market volatilities on Covivio and Firm Capital 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 Covivio with a short position of Firm Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Covivio and Firm Capital.
Diversification Opportunities for Covivio and Firm Capital
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Covivio and Firm is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Covivio and Firm Capital Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firm Capital Property and Covivio 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 Covivio are associated (or correlated) with Firm Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firm Capital Property has no effect on the direction of Covivio i.e., Covivio and Firm Capital go up and down completely randomly.
Pair Corralation between Covivio and Firm Capital
Assuming the 90 days horizon Covivio is expected to generate 13.39 times less return on investment than Firm Capital. But when comparing it to its historical volatility, Covivio is 25.3 times less risky than Firm Capital. It trades about 0.13 of its potential returns per unit of risk. Firm Capital Property is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 329.00 in Firm Capital Property on August 25, 2024 and sell it today you would earn a total of 99.00 from holding Firm Capital Property or generate 30.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 50.34% |
| Values | Daily Returns |
Covivio vs. Firm Capital Property
Performance |
| Timeline |
| Covivio |
| Firm Capital Property |
Covivio and Firm Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Covivio and Firm Capital
The main advantage of trading using opposite Covivio and Firm Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Covivio position performs unexpectedly, Firm Capital 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 Firm Capital will offset losses from the drop in Firm Capital's long position.| Covivio vs. British Land | Covivio vs. Global Net Lease, | Covivio vs. VICI Properties | Covivio vs. British Land |
| Firm Capital vs. British Land | Firm Capital vs. Global Net Lease, | Firm Capital vs. VICI Properties | Firm Capital vs. British Land |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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