Correlation Between Sterling Construction and CITY OFFICE
Can any of the company-specific risk be diversified away by investing in both Sterling Construction 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 Sterling Construction and CITY OFFICE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sterling Construction and CITY OFFICE REIT, you can compare the effects of market volatilities on Sterling Construction 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 Sterling Construction with a short position of CITY OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sterling Construction and CITY OFFICE.
Diversification Opportunities for Sterling Construction and CITY OFFICE
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sterling and CITY is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sterling Construction 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 Sterling Construction 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 Sterling Construction 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 Sterling Construction i.e., Sterling Construction and CITY OFFICE go up and down completely randomly.
Pair Corralation between Sterling Construction and CITY OFFICE
Assuming the 90 days horizon Sterling Construction is expected to generate 0.97 times more return on investment than CITY OFFICE. However, Sterling Construction is 1.03 times less risky than CITY OFFICE. It trades about 0.12 of its potential returns per unit of risk. CITY OFFICE REIT is currently generating about 0.03 per unit of risk. If you would invest 4,920 in Sterling Construction on August 31, 2024 and sell it today you would earn a total of 13,390 from holding Sterling Construction or generate 272.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Sterling Construction vs. CITY OFFICE REIT
Performance |
| Timeline |
| Sterling Construction |
| CITY OFFICE REIT |
Sterling Construction and CITY OFFICE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sterling Construction and CITY OFFICE
The main advantage of trading using opposite Sterling Construction and CITY OFFICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sterling Construction 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.| Sterling Construction vs. Larsen Toubro Limited | Sterling Construction vs. Superior Plus Corp | Sterling Construction vs. NMI Holdings | Sterling Construction vs. Origin Agritech |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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