Correlation Between Corporate Office and MSAD INSURANCE

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

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

Diversification Opportunities for Corporate Office and MSAD INSURANCE

0.77

Correlation Coefficient

Corporate Office  MSAD INSURANCE

Poor diversification

The 3 months correlation between Corporate and MSAD is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office Properties and MSAD INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MSAD INSURANCE and Corporate Office 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 Corporate Office Properties are associated (or correlated) with MSAD INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MSAD INSURANCE has no effect on the direction of Corporate Office i.e., Corporate Office and MSAD INSURANCE go up and down completely randomly.

Pair Corralation between Corporate Office and MSAD INSURANCE

Assuming the 90 days horizon Corporate Office Properties is expected to under-perform the MSAD INSURANCE. In addition to that, Corporate Office is 1.27 times more volatile than MSAD INSURANCE. It trades about -0.2 of its total potential returns per unit of risk. MSAD INSURANCE is currently generating about -0.13 per unit of volatility. If you would invest  2,160  in MSAD INSURANCE on December 2, 2024 and sell it today you would lose (180.00) from holding MSAD INSURANCE or give up 8.33% of portfolio value over 90 days.

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

Corporate Office Properties  vs.  MSAD INSURANCE

Corporate Office Pro

Risk-Adjusted Performance

Very Weak

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

MSAD INSURANCE

Risk-Adjusted Performance

Very Weak

Over the last 90 days MSAD INSURANCE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Corporate Office and MSAD INSURANCE

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

The idea behind Corporate Office Properties and MSAD INSURANCE 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.