Correlation Between Corporate Office and Equity LifeStyle
Can any of the company-specific risk be diversified away by investing in both Corporate Office and Equity LifeStyle 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 Equity LifeStyle 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 Equity LifeStyle Properties, you can compare the effects of market volatilities on Corporate Office and Equity LifeStyle 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 Equity LifeStyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Office and Equity LifeStyle.
Diversification Opportunities for Corporate Office and Equity LifeStyle
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Corporate and Equity is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office Properties and Equity LifeStyle Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity LifeStyle Pro 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 Equity LifeStyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity LifeStyle Pro has no effect on the direction of Corporate Office i.e., Corporate Office and Equity LifeStyle go up and down completely randomly.
Pair Corralation between Corporate Office and Equity LifeStyle
Assuming the 90 days horizon Corporate Office Properties is expected to under-perform the Equity LifeStyle. In addition to that, Corporate Office is 1.02 times more volatile than Equity LifeStyle Properties. It trades about -0.26 of its total potential returns per unit of risk. Equity LifeStyle Properties is currently generating about -0.06 per unit of volatility. If you would invest 6,451 in Equity LifeStyle Properties on October 13, 2024 and sell it today you would lose (101.00) from holding Equity LifeStyle Properties or give up 1.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Corporate Office Properties vs. Equity LifeStyle Properties
Performance |
| Timeline |
| Corporate Office Pro |
| Equity LifeStyle Pro |
Corporate Office and Equity LifeStyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Office and Equity LifeStyle
The main advantage of trading using opposite Corporate Office and Equity LifeStyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Office position performs unexpectedly, Equity LifeStyle 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 Equity LifeStyle will offset losses from the drop in Equity LifeStyle's long position.| Corporate Office vs. Semiconductor Manufacturing International | Corporate Office vs. NORTHEAST UTILITIES | Corporate Office vs. ELMOS SEMICONDUCTOR | Corporate Office vs. Samsung Electronics Co |
| Equity LifeStyle vs. OFFICE DEPOT | Equity LifeStyle vs. Corporate Office Properties | Equity LifeStyle vs. Kingdee International Software | Equity LifeStyle vs. DFS Furniture PLC |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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