Correlation Between Vornado Realty and City Office
Can any of the company-specific risk be diversified away by investing in both Vornado Realty 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 Vornado Realty and City Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vornado Realty Trust and City Office REIT, you can compare the effects of market volatilities on Vornado Realty 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 Vornado Realty with a short position of City Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vornado Realty and City Office.
Diversification Opportunities for Vornado Realty and City Office
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vornado and City is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Vornado Realty Trust 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 Vornado Realty 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 Vornado Realty Trust 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 Vornado Realty i.e., Vornado Realty and City Office go up and down completely randomly.
Pair Corralation between Vornado Realty and City Office
Assuming the 90 days trading horizon Vornado Realty is expected to generate 1.45 times less return on investment than City Office. But when comparing it to its historical volatility, Vornado Realty Trust is 1.23 times less risky than City Office. It trades about 0.06 of its potential returns per unit of risk. City Office REIT is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,516 in City Office REIT on August 27, 2024 and sell it today you would earn a total of 367.00 from holding City Office REIT or generate 24.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vornado Realty Trust vs. City Office REIT
Performance |
| Timeline |
| Vornado Realty Trust |
| City Office REIT |
Vornado Realty and City Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vornado Realty and City Office
The main advantage of trading using opposite Vornado Realty and City Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vornado Realty 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.| Vornado Realty vs. Vornado Realty Trust | Vornado Realty vs. Vornado Realty Trust | Vornado Realty vs. Equity Commonwealth | Vornado Realty vs. Hudson Pacific Properties |
| City Office vs. Vornado Realty Trust | City Office vs. Vornado Realty Trust | City Office vs. SL Green Realty | City Office vs. Hudson Pacific Properties |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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