Correlation Between Dream Office and RioCan Real
Can any of the company-specific risk be diversified away by investing in both Dream Office and RioCan Real 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 Dream Office and RioCan Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dream Office Real and RioCan Real Estate, you can compare the effects of market volatilities on Dream Office and RioCan Real 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 Dream Office with a short position of RioCan Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dream Office and RioCan Real.
Diversification Opportunities for Dream Office and RioCan Real
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dream and RioCan is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dream Office Real and RioCan Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RioCan Real Estate and Dream 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 Dream Office Real are associated (or correlated) with RioCan Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RioCan Real Estate has no effect on the direction of Dream Office i.e., Dream Office and RioCan Real go up and down completely randomly.
Pair Corralation between Dream Office and RioCan Real
Assuming the 90 days trading horizon Dream Office Real is expected to under-perform the RioCan Real. In addition to that, Dream Office is 2.69 times more volatile than RioCan Real Estate. It trades about -0.04 of its total potential returns per unit of risk. RioCan Real Estate is currently generating about -0.03 per unit of volatility. If you would invest 1,983 in RioCan Real Estate on January 26, 2024 and sell it today you would lose (213.00) from holding RioCan Real Estate or give up 10.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dream Office Real vs. RioCan Real Estate
Performance |
| Timeline |
| Dream Office Real |
| RioCan Real Estate |
Dream Office and RioCan Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dream Office and RioCan Real
The main advantage of trading using opposite Dream Office and RioCan Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dream Office position performs unexpectedly, RioCan Real 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 RioCan Real will offset losses from the drop in RioCan Real's long position.| Dream Office vs. Artis Real Estate | Dream Office vs. Boardwalk Real Estate | Dream Office vs. Allied Properties Real | Dream Office vs. HR Real Estate |
| RioCan Real vs. SmartCentres Real Estate | RioCan Real vs. HR Real Estate | RioCan Real vs. Fortis Inc | RioCan Real vs. Enbridge |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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