Correlation Between SILVER BULLET and CITY OFFICE

Can any of the company-specific risk be diversified away by investing in both SILVER BULLET and CITY OFFICE 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 SILVER BULLET and CITY OFFICE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SILVER BULLET DATA and CITY OFFICE REIT, you can compare the effects of market volatilities on SILVER BULLET and CITY OFFICE 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 SILVER BULLET with a short position of CITY OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SILVER BULLET and CITY OFFICE.

Diversification Opportunities for SILVER BULLET and CITY OFFICE

0.54

Correlation Coefficient

SILVER BULLET  CITY OFFICE

Very weak diversification

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

Pair Corralation between SILVER BULLET and CITY OFFICE

Assuming the 90 days horizon SILVER BULLET DATA is expected to generate 1.71 times more return on investment than CITY OFFICE. However, SILVER BULLET is 1.71 times more volatile than CITY OFFICE REIT. It trades about 0.03 of its potential returns per unit of risk. CITY OFFICE REIT is currently generating about 0.0 per unit of risk. If you would invest  78.00  in SILVER BULLET DATA on October 11, 2024 and sell it today you would lose (7.00) from holding SILVER BULLET DATA or give up 8.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

SILVER BULLET DATA  vs.  CITY OFFICE REIT

SILVER BULLET DATA

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SILVER BULLET DATA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SILVER BULLET reported solid returns over the last few months and may actually be approaching a breakup point.

CITY OFFICE REIT

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CITY OFFICE REIT are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CITY OFFICE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SILVER BULLET and CITY OFFICE

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

The idea behind SILVER BULLET DATA and CITY OFFICE REIT 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.