Correlation Between HomeToGo and Corporate Office

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

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

Diversification Opportunities for HomeToGo and Corporate Office

0.77

Correlation Coefficient

HomeToGo  Corporate Office

Poor diversification

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

Pair Corralation between HomeToGo and Corporate Office

Assuming the 90 days trading horizon HomeToGo SE is expected to generate 2.29 times more return on investment than Corporate Office. However, HomeToGo is 2.29 times more volatile than Corporate Office Properties. It trades about 0.14 of its potential returns per unit of risk. Corporate Office Properties is currently generating about 0.22 per unit of risk. If you would invest  179.00  in HomeToGo SE on September 4, 2024 and sell it today you would earn a total of  43.00  from holding HomeToGo SE or generate 24.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

HomeToGo SE  vs.  Corporate Office Properties

HomeToGo SE

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HomeToGo SE are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, HomeToGo unveiled solid returns over the last few months and may actually be approaching a breakup point.

Corporate Office Pro

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Corporate Office Properties are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Corporate Office reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with HomeToGo and Corporate Office

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

The idea behind HomeToGo SE and Corporate Office Properties 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 Global Correlations module to find global opportunities by holding instruments from different markets.