Correlation Between True North and Slate Office
Can any of the company-specific risk be diversified away by investing in both True North and Slate 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 True North and Slate Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between True North Commercial and Slate Office REIT, you can compare the effects of market volatilities on True North and Slate 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 True North with a short position of Slate Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of True North and Slate Office.
Diversification Opportunities for True North and Slate Office
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between True and Slate is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding True North Commercial and Slate Office REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Slate Office REIT and True North 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 True North Commercial are associated (or correlated) with Slate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Slate Office REIT has no effect on the direction of True North i.e., True North and Slate Office go up and down completely randomly.
Pair Corralation between True North and Slate Office
Assuming the 90 days trading horizon True North Commercial is expected to generate 0.6 times more return on investment than Slate Office. However, True North Commercial is 1.67 times less risky than Slate Office. It trades about -0.11 of its potential returns per unit of risk. Slate Office REIT is currently generating about -0.31 per unit of risk. If you would invest 1,231 in True North Commercial on August 27, 2024 and sell it today you would lose (87.00) from holding True North Commercial or give up 7.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
True North Commercial vs. Slate Office REIT
Performance |
| Timeline |
| True North Commercial |
| Slate Office REIT |
True North and Slate Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with True North and Slate Office
The main advantage of trading using opposite True North and Slate Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if True North position performs unexpectedly, Slate 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 Slate Office will offset losses from the drop in Slate Office's long position.| True North vs. Slate Office REIT | True North vs. Inovalis Real Estate | True North vs. BTB Real Estate | True North vs. Slate Grocery REIT |
| Slate Office vs. True North Commercial | Slate Office vs. BTB Real Estate | Slate Office vs. Inovalis Real Estate | Slate Office vs. Slate Grocery 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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