Correlation Between STORE ELECTRONIC and CITY OFFICE
Can any of the company-specific risk be diversified away by investing in both STORE ELECTRONIC 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 STORE ELECTRONIC and CITY OFFICE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STORE ELECTRONIC and CITY OFFICE REIT, you can compare the effects of market volatilities on STORE ELECTRONIC 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 STORE ELECTRONIC with a short position of CITY OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of STORE ELECTRONIC and CITY OFFICE.
Diversification Opportunities for STORE ELECTRONIC and CITY OFFICE
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STORE and CITY is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding STORE ELECTRONIC and CITY OFFICE REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITY OFFICE REIT and STORE ELECTRONIC 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 STORE ELECTRONIC 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 REIT has no effect on the direction of STORE ELECTRONIC i.e., STORE ELECTRONIC and CITY OFFICE go up and down completely randomly.
Pair Corralation between STORE ELECTRONIC and CITY OFFICE
Assuming the 90 days trading horizon STORE ELECTRONIC is expected to under-perform the CITY OFFICE. But the stock apears to be less risky and, when comparing its historical volatility, STORE ELECTRONIC is 2.22 times less risky than CITY OFFICE. The stock trades about -0.04 of its potential returns per unit of risk. The CITY OFFICE REIT is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 472.00 in CITY OFFICE REIT on August 31, 2024 and sell it today you would earn a total of 88.00 from holding CITY OFFICE REIT or generate 18.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STORE ELECTRONIC vs. CITY OFFICE REIT
Performance |
| Timeline |
| STORE ELECTRONIC |
| CITY OFFICE REIT |
STORE ELECTRONIC and CITY OFFICE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STORE ELECTRONIC and CITY OFFICE
The main advantage of trading using opposite STORE ELECTRONIC and CITY OFFICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STORE ELECTRONIC 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.| STORE ELECTRONIC vs. ADRIATIC METALS LS 013355 | STORE ELECTRONIC vs. LION ONE METALS | STORE ELECTRONIC vs. Beijing Media | STORE ELECTRONIC vs. PARKEN Sport Entertainment |
| CITY OFFICE vs. Columbia Sportswear | CITY OFFICE vs. INTERSHOP Communications Aktiengesellschaft | CITY OFFICE vs. Charter Communications | CITY OFFICE vs. KOOL2PLAY SA ZY |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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