Correlation Between CITY OFFICE and Whirlpool

Can any of the company-specific risk be diversified away by investing in both CITY OFFICE and Whirlpool 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 Whirlpool 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 Whirlpool, you can compare the effects of market volatilities on CITY OFFICE and Whirlpool 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 Whirlpool. Check out your portfolio center. Please also check ongoing floating volatility patterns of CITY OFFICE and Whirlpool.

Diversification Opportunities for CITY OFFICE and Whirlpool

0.54

Correlation Coefficient

CITY OFFICE  Whirlpool

Very weak diversification

The 3 months correlation between CITY and Whirlpool is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool 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 Whirlpool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whirlpool has no effect on the direction of CITY OFFICE i.e., CITY OFFICE and Whirlpool go up and down completely randomly.

Pair Corralation between CITY OFFICE and Whirlpool

Assuming the 90 days horizon CITY OFFICE REIT is expected to generate 1.48 times more return on investment than Whirlpool. However, CITY OFFICE is 1.48 times more volatile than Whirlpool. It trades about 0.03 of its potential returns per unit of risk. Whirlpool is currently generating about 0.01 per unit of risk. If you would invest  430.00  in CITY OFFICE REIT on October 24, 2024 and sell it today you would earn a total of  66.00  from holding CITY OFFICE REIT or generate 15.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.75%
Values	Daily Returns

CITY OFFICE REIT  vs.  Whirlpool

CITY OFFICE REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CITY OFFICE REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CITY OFFICE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Whirlpool

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Whirlpool are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Whirlpool reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CITY OFFICE and Whirlpool

The main advantage of trading using opposite CITY OFFICE and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CITY OFFICE position performs unexpectedly, Whirlpool 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 Whirlpool will offset losses from the drop in Whirlpool's long position.

The idea behind CITY OFFICE REIT and Whirlpool pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.