Correlation Between Corporate Office and S A P
Can any of the company-specific risk be diversified away by investing in both Corporate Office and S A P 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 S A P 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 SAP SE, you can compare the effects of market volatilities on Corporate Office and S A P 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 S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Office and S A P.
Diversification Opportunities for Corporate Office and S A P
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Corporate and SAP is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office Properties and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE 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 S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE has no effect on the direction of Corporate Office i.e., Corporate Office and S A P go up and down completely randomly.
Pair Corralation between Corporate Office and S A P
Assuming the 90 days horizon Corporate Office is expected to generate 1.23 times less return on investment than S A P. In addition to that, Corporate Office is 1.32 times more volatile than SAP SE. It trades about 0.13 of its total potential returns per unit of risk. SAP SE is currently generating about 0.21 per unit of volatility. If you would invest 21,380 in SAP SE on September 3, 2024 and sell it today you would earn a total of 1,110 from holding SAP SE or generate 5.19% 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. SAP SE
Performance |
| Timeline |
| Corporate Office Pro |
| SAP SE |
Corporate Office and S A P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Office and S A P
The main advantage of trading using opposite Corporate Office and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Office position performs unexpectedly, S A P 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 S A P will offset losses from the drop in S A P's long position.| Corporate Office vs. BRIT AMER TOBACCO | Corporate Office vs. Entravision Communications | Corporate Office vs. QBE Insurance Group | Corporate Office vs. Universal Display |
| S A P vs. Corporate Office Properties | S A P vs. KB HOME | S A P vs. TYSON FOODS A | S A P vs. Ebro Foods SA |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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