Correlation Between Corporate Office and Ladder Capital
Can any of the company-specific risk be diversified away by investing in both Corporate Office and Ladder Capital 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 Ladder Capital 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 Ladder Capital Corp, you can compare the effects of market volatilities on Corporate Office and Ladder Capital 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 Ladder Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Office and Ladder Capital.
Diversification Opportunities for Corporate Office and Ladder Capital
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Corporate and Ladder is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office Properties and Ladder Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladder Capital Corp 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 Ladder Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladder Capital Corp has no effect on the direction of Corporate Office i.e., Corporate Office and Ladder Capital go up and down completely randomly.
Pair Corralation between Corporate Office and Ladder Capital
Assuming the 90 days horizon Corporate Office Properties is expected to under-perform the Ladder Capital. But the stock apears to be less risky and, when comparing its historical volatility, Corporate Office Properties is 1.04 times less risky than Ladder Capital. The stock trades about -0.29 of its potential returns per unit of risk. The Ladder Capital Corp is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest 1,115 in Ladder Capital Corp on October 14, 2024 and sell it today you would lose (55.00) from holding Ladder Capital Corp or give up 4.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Corporate Office Properties vs. Ladder Capital Corp
Performance |
| Timeline |
| Corporate Office Pro |
| Ladder Capital Corp |
Corporate Office and Ladder Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Office and Ladder Capital
The main advantage of trading using opposite Corporate Office and Ladder Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Office position performs unexpectedly, Ladder Capital 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 Ladder Capital will offset losses from the drop in Ladder Capital's long position.| Corporate Office vs. Nippon Steel | Corporate Office vs. Summit Hotel Properties | Corporate Office vs. DONGJIANG ENVIRONMENTAL H | Corporate Office vs. Xiwang Special Steel |
| Ladder Capital vs. Hisense Home Appliances | Ladder Capital vs. Corporate Office Properties | Ladder Capital vs. OFFICE DEPOT | Ladder Capital vs. OPERA SOFTWARE |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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