Correlation Between Apartment Investment and COPT Defense

Can any of the company-specific risk be diversified away by investing in both Apartment Investment and COPT Defense 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 Apartment Investment and COPT Defense into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Apartment Investment and and COPT Defense Properties, you can compare the effects of market volatilities on Apartment Investment and COPT Defense 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 Apartment Investment with a short position of COPT Defense. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apartment Investment and COPT Defense.

Diversification Opportunities for Apartment Investment and COPT Defense

-0.5

Correlation Coefficient

Apartment Investment  COPT Defense

Very good diversification

The 3 months correlation between Apartment and COPT is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Apartment Investment and and COPT Defense Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COPT Defense Properties and Apartment Investment 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 Apartment Investment and are associated (or correlated) with COPT Defense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COPT Defense Properties has no effect on the direction of Apartment Investment i.e., Apartment Investment and COPT Defense go up and down completely randomly.

Pair Corralation between Apartment Investment and COPT Defense

Considering the 90-day investment horizon Apartment Investment and is expected to generate 1.35 times more return on investment than COPT Defense. However, Apartment Investment is 1.35 times more volatile than COPT Defense Properties. It trades about 0.11 of its potential returns per unit of risk. COPT Defense Properties is currently generating about -0.14 per unit of risk. If you would invest  783.00  in Apartment Investment and on December 28, 2024 and sell it today you would earn a total of  92.00  from holding Apartment Investment and or generate 11.75% return on investment over 90 days.

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

Apartment Investment and  vs.  COPT Defense Properties

Apartment Investment and

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apartment Investment and are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Apartment Investment may actually be approaching a critical reversion point that can send shares even higher in April 2025.

COPT Defense Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days COPT Defense Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Apartment Investment and COPT Defense

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

The idea behind Apartment Investment and and COPT Defense Properties 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.