Correlation Between Office Properties and Nexus Real
Can any of the company-specific risk be diversified away by investing in both Office Properties and Nexus 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 Nexus 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 Nexus Real Estate, you can compare the effects of market volatilities on Office Properties and Nexus 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 Nexus Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Office Properties and Nexus Real.
Diversification Opportunities for Office Properties and Nexus Real
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Office and Nexus is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Office Properties Income and Nexus Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexus 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 Nexus Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexus Real Estate has no effect on the direction of Office Properties i.e., Office Properties and Nexus Real go up and down completely randomly.
Pair Corralation between Office Properties and Nexus Real
Assuming the 90 days horizon Office Properties Income is expected to generate 2.0 times more return on investment than Nexus Real. However, Office Properties is 2.0 times more volatile than Nexus Real Estate. It trades about -0.01 of its potential returns per unit of risk. Nexus Real Estate is currently generating about -0.04 per unit of risk. If you would invest 1,166 in Office Properties Income on August 25, 2024 and sell it today you would lose (58.00) from holding Office Properties Income or give up 4.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.77% |
| Values | Daily Returns |
Office Properties Income vs. Nexus Real Estate
Performance |
| Timeline |
| Office Properties Income |
| Nexus Real Estate |
Office Properties and Nexus Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Office Properties and Nexus Real
The main advantage of trading using opposite Office Properties and Nexus Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Office Properties position performs unexpectedly, Nexus 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 Nexus Real will offset losses from the drop in Nexus Real's long position.| Office Properties vs. United States Cellular | Office Properties vs. United States Cellular | Office Properties vs. DBA Sempra 5750 | Office Properties vs. Hancock Whitney |
| Nexus Real vs. Smart REIT | Nexus Real vs. Phillips Edison Co | Nexus Real vs. Simon Property Group | Nexus Real vs. Plaza Retail REIT |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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