Correlation Between Prime Office and Target
Can any of the company-specific risk be diversified away by investing in both Prime Office and Target 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 Prime Office and Target into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Office AS and Target, you can compare the effects of market volatilities on Prime Office and Target 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 Prime Office with a short position of Target. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Office and Target.
Diversification Opportunities for Prime Office and Target
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Prime and Target is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Prime Office AS and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target and Prime 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 Prime Office AS are associated (or correlated) with Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Prime Office i.e., Prime Office and Target go up and down completely randomly.
Pair Corralation between Prime Office and Target
Assuming the 90 days trading horizon Prime Office AS is expected to generate 1.97 times more return on investment than Target. However, Prime Office is 1.97 times more volatile than Target. It trades about -0.04 of its potential returns per unit of risk. Target is currently generating about -0.18 per unit of risk. If you would invest 18,000 in Prime Office AS on January 26, 2024 and sell it today you would lose (400.00) from holding Prime Office AS or give up 2.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Prime Office AS vs. Target
Performance |
| Timeline |
| Prime Office AS |
| Target |
Prime Office and Target Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Office and Target
The main advantage of trading using opposite Prime Office and Target positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Office position performs unexpectedly, Target 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 Target will offset losses from the drop in Target's long position.| Prime Office vs. Djurslands Bank | Prime Office vs. North Media AS | Prime Office vs. First Farms AS | Prime Office vs. Flgger group AS |
| Target vs. Costco Wholesale Corp | Target vs. BJs Wholesale Club | Target vs. Dollar Tree | Target vs. Dollar General |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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