Correlation Between Colliers International and CoStar

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

By analyzing existing cross correlation between Colliers International Group and CoStar Group, you can compare the effects of market volatilities on Colliers International and CoStar 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 Colliers International with a short position of CoStar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colliers International and CoStar.

Diversification Opportunities for Colliers International and CoStar

-0.1

Correlation Coefficient

Colliers International  CoStar

Good diversification

The 3 months correlation between Colliers and CoStar is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Colliers International Group and CoStar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoStar Group and Colliers International 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 Colliers International Group are associated (or correlated) with CoStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoStar Group has no effect on the direction of Colliers International i.e., Colliers International and CoStar go up and down completely randomly.

Pair Corralation between Colliers International and CoStar

Given the investment horizon of 90 days Colliers International Group is expected to generate 0.8 times more return on investment than CoStar. However, Colliers International Group is 1.25 times less risky than CoStar. It trades about 0.08 of its potential returns per unit of risk. CoStar Group is currently generating about 0.04 per unit of risk. If you would invest  14,046  in Colliers International Group on September 4, 2024 and sell it today you would earn a total of  1,116  from holding Colliers International Group or generate 7.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Colliers International Group  vs.  CoStar Group

Colliers International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Colliers International Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical and fundamental indicators, Colliers International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CoStar Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CoStar Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, CoStar is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Colliers International and CoStar

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

The idea behind Colliers International Group and CoStar Group 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.