Correlation Between Australian Agricultural and CITY OFFICE
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and CITY 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 Australian Agricultural and CITY OFFICE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and CITY OFFICE REIT, you can compare the effects of market volatilities on Australian Agricultural and CITY 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 Australian Agricultural with a short position of CITY OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and CITY OFFICE.
Diversification Opportunities for Australian Agricultural and CITY OFFICE
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Australian and CITY is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and CITY OFFICE REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITY OFFICE REIT and Australian Agricultural 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 Australian Agricultural are associated (or correlated) with CITY OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITY OFFICE REIT has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and CITY OFFICE go up and down completely randomly.
Pair Corralation between Australian Agricultural and CITY OFFICE
Assuming the 90 days horizon Australian Agricultural is expected to generate 10.52 times less return on investment than CITY OFFICE. But when comparing it to its historical volatility, Australian Agricultural is 3.26 times less risky than CITY OFFICE. It trades about 0.0 of its potential returns per unit of risk. CITY OFFICE REIT is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 520.00 in CITY OFFICE REIT on September 28, 2024 and sell it today you would earn a total of 0.00 from holding CITY OFFICE REIT or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Australian Agricultural vs. CITY OFFICE REIT
Performance |
Timeline |
Australian Agricultural |
CITY OFFICE REIT |
Australian Agricultural and CITY OFFICE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Australian Agricultural and CITY OFFICE
The main advantage of trading using opposite Australian Agricultural and CITY OFFICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, CITY 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 CITY OFFICE will offset losses from the drop in CITY OFFICE's long position.Australian Agricultural vs. Gladstone Investment | Australian Agricultural vs. ATRYS HEALTH SA | Australian Agricultural vs. HEALTHCARE REAL A | Australian Agricultural vs. Bumrungrad Hospital Public |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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