Correlation Between Covivio SA and W P

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

By analyzing existing cross correlation between Covivio SA and W P Carey, you can compare the effects of market volatilities on Covivio SA and W P 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 Covivio SA with a short position of W P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Covivio SA and W P.

Diversification Opportunities for Covivio SA and W P

0.55

Correlation Coefficient

Covivio SA  W P

Very weak diversification

The 3 months correlation between Covivio and WPY is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Covivio SA and W P Carey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on W P Carey and Covivio SA 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 Covivio SA are associated (or correlated) with W P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of W P Carey has no effect on the direction of Covivio SA i.e., Covivio SA and W P go up and down completely randomly.

Pair Corralation between Covivio SA and W P

Assuming the 90 days horizon Covivio SA is expected to under-perform the W P. In addition to that, Covivio SA is 1.51 times more volatile than W P Carey. It trades about -0.16 of its total potential returns per unit of risk. W P Carey is currently generating about -0.12 per unit of volatility. If you would invest  5,583  in W P Carey on September 22, 2024 and sell it today you would lose (415.00) from holding W P Carey or give up 7.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.48%
Values	Daily Returns

Covivio SA  vs.  W P Carey

Covivio SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Covivio SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

W P Carey

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days W P Carey has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Covivio SA and W P

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

The idea behind Covivio SA and W P Carey 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.