Correlation Between CITY OFFICE and Traton SE
Can any of the company-specific risk be diversified away by investing in both CITY OFFICE and Traton SE 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 CITY OFFICE and Traton SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CITY OFFICE REIT and Traton SE, you can compare the effects of market volatilities on CITY OFFICE and Traton SE 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 CITY OFFICE with a short position of Traton SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITY OFFICE and Traton SE.
Diversification Opportunities for CITY OFFICE and Traton SE
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CITY and Traton is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT and Traton SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Traton SE and CITY 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 CITY OFFICE REIT are associated (or correlated) with Traton SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Traton SE has no effect on the direction of CITY OFFICE i.e., CITY OFFICE and Traton SE go up and down completely randomly.
Pair Corralation between CITY OFFICE and Traton SE
Assuming the 90 days horizon CITY OFFICE REIT is expected to under-perform the Traton SE. But the stock apears to be less risky and, when comparing its historical volatility, CITY OFFICE REIT is 1.17 times less risky than Traton SE. The stock trades about -0.02 of its potential returns per unit of risk. The Traton SE is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,795 in Traton SE on December 28, 2024 and sell it today you would earn a total of 425.00 from holding Traton SE or generate 15.21% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CITY OFFICE REIT vs. Traton SE
Performance |
Timeline |
CITY OFFICE REIT |
Traton SE |
CITY OFFICE and Traton SE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CITY OFFICE and Traton SE
The main advantage of trading using opposite CITY OFFICE and Traton SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITY OFFICE position performs unexpectedly, Traton SE 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 Traton SE will offset losses from the drop in Traton SE's long position.CITY OFFICE vs. SENECA FOODS A | CITY OFFICE vs. Lifeway Foods | CITY OFFICE vs. JAPAN TOBACCO UNSPADR12 | CITY OFFICE vs. High Liner Foods |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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