Correlation Between Piedmont Office and Gecina SA
Can any of the company-specific risk be diversified away by investing in both Piedmont Office and Gecina SA 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 Piedmont Office and Gecina SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Piedmont Office Realty and Gecina SA, you can compare the effects of market volatilities on Piedmont Office and Gecina SA 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 Piedmont Office with a short position of Gecina SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Piedmont Office and Gecina SA.
Diversification Opportunities for Piedmont Office and Gecina SA
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Piedmont and Gecina is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Piedmont Office Realty and Gecina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gecina SA and Piedmont Office 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 Piedmont Office Realty are associated (or correlated) with Gecina SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gecina SA has no effect on the direction of Piedmont Office i.e., Piedmont Office and Gecina SA go up and down completely randomly.
Pair Corralation between Piedmont Office and Gecina SA
Considering the 90-day investment horizon Piedmont Office Realty is expected to under-perform the Gecina SA. But the stock apears to be less risky and, when comparing its historical volatility, Piedmont Office Realty is 2.47 times less risky than Gecina SA. The stock trades about -0.15 of its potential returns per unit of risk. The Gecina SA is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 10,240 in Gecina SA on September 4, 2024 and sell it today you would lose (540.00) from holding Gecina SA or give up 5.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Piedmont Office Realty vs. Gecina SA
Performance |
| Timeline |
| Piedmont Office Realty |
| Gecina SA |
Piedmont Office and Gecina SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Piedmont Office and Gecina SA
The main advantage of trading using opposite Piedmont Office and Gecina SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Piedmont Office position performs unexpectedly, Gecina SA 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 Gecina SA will offset losses from the drop in Gecina SA's long position.| Piedmont Office vs. Boston Properties | Piedmont Office vs. Douglas Emmett | Piedmont Office vs. Alexandria Real Estate | Piedmont Office vs. Vornado Realty Trust |
| Gecina SA vs. Highwoods Properties | Gecina SA vs. Piedmont Office Realty | Gecina SA vs. Douglas Emmett | Gecina SA 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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