Correlation Between Creative Media and Piedmont Office

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

By analyzing existing cross correlation between Creative Media Community and Piedmont Office Realty, you can compare the effects of market volatilities on Creative Media and Piedmont 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 Creative Media with a short position of Piedmont Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Creative Media and Piedmont Office.

Diversification Opportunities for Creative Media and Piedmont Office

0.69

Correlation Coefficient

Creative Media  Piedmont Office

Poor diversification

The 3 months correlation between Creative and Piedmont is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Creative Media Community and Piedmont Office Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piedmont Office Realty and Creative Media 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 Creative Media Community are associated (or correlated) with Piedmont Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piedmont Office Realty has no effect on the direction of Creative Media i.e., Creative Media and Piedmont Office go up and down completely randomly.

Pair Corralation between Creative Media and Piedmont Office

Given the investment horizon of 90 days Creative Media Community is expected to under-perform the Piedmont Office. In addition to that, Creative Media is 5.08 times more volatile than Piedmont Office Realty. It trades about -0.23 of its total potential returns per unit of risk. Piedmont Office Realty is currently generating about -0.13 per unit of volatility. If you would invest  867.00  in Piedmont Office Realty on December 29, 2024 and sell it today you would lose (144.00) from holding Piedmont Office Realty or give up 16.61% of portfolio value over 90 days.

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

Creative Media Community  vs.  Piedmont Office Realty

Creative Media Community

Risk-Adjusted Performance

Very Weak

Over the last 90 days Creative Media Community has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Piedmont Office Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Piedmont Office Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Creative Media and Piedmont Office

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

The idea behind Creative Media Community and Piedmont Office Realty 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.