Correlation Between Realty Income and City Office
Can any of the company-specific risk be diversified away by investing in both Realty Income 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 Realty Income and City Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Realty Income and City Office, you can compare the effects of market volatilities on Realty Income 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 Realty Income with a short position of City Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and City Office.
Diversification Opportunities for Realty Income and City Office
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Realty and City is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income and City Office in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Office and Realty Income 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 Realty Income 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 has no effect on the direction of Realty Income i.e., Realty Income and City Office go up and down completely randomly.
Pair Corralation between Realty Income and City Office
Taking into account the 90-day investment horizon Realty Income is expected to generate 0.51 times more return on investment than City Office. However, Realty Income is 1.96 times less risky than City Office. It trades about -0.09 of its potential returns per unit of risk. City Office is currently generating about -0.05 per unit of risk. If you would invest 6,121 in Realty Income on August 28, 2024 and sell it today you would lose (376.00) from holding Realty Income or give up 6.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Realty Income vs. City Office
Performance |
| Timeline |
| Realty Income |
| City Office |
Realty Income and City Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Realty Income and City Office
The main advantage of trading using opposite Realty Income and City Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realty Income 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.| Realty Income vs. Federal Realty Investment | Realty Income vs. Macerich Company | Realty Income vs. National Retail Properties | Realty Income vs. Kimco Realty |
| City Office vs. Hudson Pacific Properties | City Office vs. Piedmont Office Realty | City Office vs. Office Properties Income | City Office vs. Kilroy Realty Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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