Correlation Between Corporate Office and JOHNSON SVC

Can any of the company-specific risk be diversified away by investing in both Corporate Office and JOHNSON SVC 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 JOHNSON SVC 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 JOHNSON SVC LS 10, you can compare the effects of market volatilities on Corporate Office and JOHNSON SVC 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 JOHNSON SVC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Office and JOHNSON SVC.

Diversification Opportunities for Corporate Office and JOHNSON SVC

-0.42

Correlation Coefficient

Corporate Office  JOHNSON SVC

Very good diversification

The 3 months correlation between Corporate and JOHNSON is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office Properties and JOHNSON SVC LS 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JOHNSON SVC LS 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 JOHNSON SVC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JOHNSON SVC LS has no effect on the direction of Corporate Office i.e., Corporate Office and JOHNSON SVC go up and down completely randomly.

Pair Corralation between Corporate Office and JOHNSON SVC

Assuming the 90 days horizon Corporate Office Properties is expected to generate 0.44 times more return on investment than JOHNSON SVC. However, Corporate Office Properties is 2.29 times less risky than JOHNSON SVC. It trades about 0.01 of its potential returns per unit of risk. JOHNSON SVC LS 10 is currently generating about -0.09 per unit of risk. If you would invest  2,852  in Corporate Office Properties on October 12, 2024 and sell it today you would earn a total of  8.00  from holding Corporate Office Properties or generate 0.28% return on investment over 90 days.

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

Corporate Office Properties  vs.  JOHNSON SVC LS 10

Corporate Office Pro

Risk-Adjusted Performance

0 of 100

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 nearly stable basic indicators, Corporate Office is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

JOHNSON SVC LS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JOHNSON SVC LS 10 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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Corporate Office and JOHNSON SVC

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

The idea behind Corporate Office Properties and JOHNSON SVC LS 10 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.