Correlation Between Corporate Office and LEGAL GENERAL

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

Diversification Opportunities for Corporate Office and LEGAL GENERAL

0.44

Correlation Coefficient

Corporate Office  LEGAL GENERAL

Very weak diversification

The 3 months correlation between Corporate and LEGAL is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office Properties and LEGAL GENERAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEGAL GENERAL 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 LEGAL GENERAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEGAL GENERAL has no effect on the direction of Corporate Office i.e., Corporate Office and LEGAL GENERAL go up and down completely randomly.

Pair Corralation between Corporate Office and LEGAL GENERAL

Assuming the 90 days horizon Corporate Office Properties is expected to under-perform the LEGAL GENERAL. In addition to that, Corporate Office is 1.64 times more volatile than LEGAL GENERAL. It trades about -0.27 of its total potential returns per unit of risk. LEGAL GENERAL is currently generating about -0.14 per unit of volatility. If you would invest  285.00  in LEGAL GENERAL on October 11, 2024 and sell it today you would lose (6.00) from holding LEGAL GENERAL or give up 2.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

Corporate Office Properties  vs.  LEGAL GENERAL

Corporate Office Pro

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Corporate Office Properties are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

LEGAL GENERAL

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LEGAL GENERAL are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, LEGAL GENERAL is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Corporate Office and LEGAL GENERAL

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

The idea behind Corporate Office Properties and LEGAL GENERAL 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.