Correlation Between Office Properties and Creative Media
Can any of the company-specific risk be diversified away by investing in both Office Properties and Creative Media 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 Creative Media 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 Creative Media Community, you can compare the effects of market volatilities on Office Properties and Creative Media 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 Creative Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Office Properties and Creative Media.
Diversification Opportunities for Office Properties and Creative Media
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Office and Creative is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Office Properties Income and Creative Media Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creative Media Community 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 Creative Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creative Media Community has no effect on the direction of Office Properties i.e., Office Properties and Creative Media go up and down completely randomly.
Pair Corralation between Office Properties and Creative Media
Considering the 90-day investment horizon Office Properties Income is expected to generate 0.79 times more return on investment than Creative Media. However, Office Properties Income is 1.27 times less risky than Creative Media. It trades about -0.02 of its potential returns per unit of risk. Creative Media Community is currently generating about -0.19 per unit of risk. If you would invest 227.00 in Office Properties Income on September 1, 2024 and sell it today you would lose (62.00) from holding Office Properties Income or give up 27.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Office Properties Income vs. Creative Media Community
Performance |
| Timeline |
| Office Properties Income |
| Creative Media Community |
Office Properties and Creative Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Office Properties and Creative Media
The main advantage of trading using opposite Office Properties and Creative Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Office Properties position performs unexpectedly, Creative Media 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 Creative Media will offset losses from the drop in Creative Media'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 |
| Creative Media vs. Cousins Properties Incorporated | Creative Media vs. Highwoods Properties | Creative Media vs. Douglas Emmett | Creative Media vs. Equity Commonwealth |
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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