Correlation Between CITY OFFICE and Danaher
Can any of the company-specific risk be diversified away by investing in both CITY OFFICE and Danaher 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 Danaher 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 Danaher, you can compare the effects of market volatilities on CITY OFFICE and Danaher 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 Danaher. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITY OFFICE and Danaher.
Diversification Opportunities for CITY OFFICE and Danaher
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CITY and Danaher is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT and Danaher in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danaher 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 Danaher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danaher has no effect on the direction of CITY OFFICE i.e., CITY OFFICE and Danaher go up and down completely randomly.
Pair Corralation between CITY OFFICE and Danaher
Assuming the 90 days horizon CITY OFFICE REIT is expected to generate 1.4 times more return on investment than Danaher. However, CITY OFFICE is 1.4 times more volatile than Danaher. It trades about -0.02 of its potential returns per unit of risk. Danaher is currently generating about -0.12 per unit of risk. If you would invest 500.00 in CITY OFFICE REIT on December 29, 2024 and sell it today you would lose (20.00) from holding CITY OFFICE REIT or give up 4.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.44% |
Values | Daily Returns |
CITY OFFICE REIT vs. Danaher
Performance |
Timeline |
CITY OFFICE REIT |
Danaher |
CITY OFFICE and Danaher Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CITY OFFICE and Danaher
The main advantage of trading using opposite CITY OFFICE and Danaher positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITY OFFICE position performs unexpectedly, Danaher 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 Danaher will offset losses from the drop in Danaher's long position.CITY OFFICE vs. GALENA MINING LTD | CITY OFFICE vs. Enter Air SA | CITY OFFICE vs. SERI INDUSTRIAL EO | CITY OFFICE vs. Westinghouse Air Brake |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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