Correlation Between Corporate Office and DFS Furniture
Can any of the company-specific risk be diversified away by investing in both Corporate Office and DFS Furniture 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 Corporate Office and DFS Furniture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Office Properties and DFS Furniture PLC, you can compare the effects of market volatilities on Corporate Office and DFS Furniture 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 Corporate Office with a short position of DFS Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Office and DFS Furniture.
Diversification Opportunities for Corporate Office and DFS Furniture
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Corporate and DFS is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office Properties and DFS Furniture PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFS Furniture PLC and Corporate 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 Corporate Office Properties are associated (or correlated) with DFS Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFS Furniture PLC has no effect on the direction of Corporate Office i.e., Corporate Office and DFS Furniture go up and down completely randomly.
Pair Corralation between Corporate Office and DFS Furniture
Assuming the 90 days horizon Corporate Office Properties is expected to generate 0.79 times more return on investment than DFS Furniture. However, Corporate Office Properties is 1.26 times less risky than DFS Furniture. It trades about 0.16 of its potential returns per unit of risk. DFS Furniture PLC is currently generating about 0.11 per unit of risk. If you would invest 2,920 in Corporate Office Properties on September 1, 2024 and sell it today you would earn a total of 160.00 from holding Corporate Office Properties or generate 5.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Corporate Office Properties vs. DFS Furniture PLC
Performance |
| Timeline |
| Corporate Office Pro |
| DFS Furniture PLC |
Corporate Office and DFS Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Office and DFS Furniture
The main advantage of trading using opposite Corporate Office and DFS Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Office position performs unexpectedly, DFS Furniture 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 DFS Furniture will offset losses from the drop in DFS Furniture's long position.| Corporate Office vs. Clean Energy Fuels | Corporate Office vs. BJs Restaurants | Corporate Office vs. FRACTAL GAMING GROUP | Corporate Office vs. ANGLER GAMING PLC |
| DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc | DFS Furniture vs. Apple Inc |
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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