Correlation Between Office Properties and Alexandria Real
Can any of the company-specific risk be diversified away by investing in both Office Properties and Alexandria Real 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 Office Properties and Alexandria Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Office Properties Income and Alexandria Real Estate, you can compare the effects of market volatilities on Office Properties and Alexandria Real 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 Office Properties with a short position of Alexandria Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Office Properties and Alexandria Real.
Diversification Opportunities for Office Properties and Alexandria Real
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Office and Alexandria is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Office Properties Income and Alexandria Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexandria Real Estate and Office Properties 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 Office Properties Income are associated (or correlated) with Alexandria Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexandria Real Estate has no effect on the direction of Office Properties i.e., Office Properties and Alexandria Real go up and down completely randomly.
Pair Corralation between Office Properties and Alexandria Real
Considering the 90-day investment horizon Office Properties Income is expected to under-perform the Alexandria Real. In addition to that, Office Properties is 2.44 times more volatile than Alexandria Real Estate. It trades about -0.08 of its total potential returns per unit of risk. Alexandria Real Estate is currently generating about -0.02 per unit of volatility. If you would invest 13,842 in Alexandria Real Estate on August 25, 2024 and sell it today you would lose (3,253) from holding Alexandria Real Estate or give up 23.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Office Properties Income vs. Alexandria Real Estate
Performance |
| Timeline |
| Office Properties Income |
| Alexandria Real Estate |
Office Properties and Alexandria Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Office Properties and Alexandria Real
The main advantage of trading using opposite Office Properties and Alexandria Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Office Properties position performs unexpectedly, Alexandria Real 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 Alexandria Real will offset losses from the drop in Alexandria Real's long position.| Office Properties vs. Hudson Pacific Properties | Office Properties vs. Piedmont Office Realty | Office Properties vs. City Office | Office Properties vs. Kilroy Realty Corp |
| Alexandria Real vs. Vornado Realty Trust | Alexandria Real vs. SL Green Realty | Alexandria Real vs. Kilroy Realty Corp | Alexandria Real vs. Highwoods 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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