Correlation Between Corporate Office and Corning Incorporated

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

Diversification Opportunities for Corporate Office and Corning Incorporated

0.92

Correlation Coefficient

Corporate Office  Corning Incorporated

Almost no diversification

The 3 months correlation between Corporate and Corning is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office Properties and Corning Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corning Incorporated 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 Corning Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corning Incorporated has no effect on the direction of Corporate Office i.e., Corporate Office and Corning Incorporated go up and down completely randomly.

Pair Corralation between Corporate Office and Corning Incorporated

Assuming the 90 days horizon Corporate Office Properties is expected to generate 0.52 times more return on investment than Corning Incorporated. However, Corporate Office Properties is 1.92 times less risky than Corning Incorporated. It trades about 0.23 of its potential returns per unit of risk. Corning Incorporated is currently generating about 0.11 per unit of risk. If you would invest  2,187  in Corporate Office Properties on September 3, 2024 and sell it today you would earn a total of  893.00  from holding Corporate Office Properties or generate 40.83% return on investment over 90 days.

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

Corporate Office Properties  vs.  Corning Incorporated

Corporate Office Pro

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Corporate Office Properties are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Corporate Office reported solid returns over the last few months and may actually be approaching a breakup point.

Corning Incorporated

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Corning Incorporated are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Corning Incorporated reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Corporate Office and Corning Incorporated

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

The idea behind Corporate Office Properties and Corning Incorporated 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.