Correlation Between Creative Media and City Office

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Can any of the company-specific risk be diversified away by investing in both Creative Media 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 Creative Media and City Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Creative Media Community and City Office REIT, you can compare the effects of market volatilities on Creative Media 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 Creative Media with a short position of City Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Creative Media and City Office.

Diversification Opportunities for Creative Media and City Office

-0.43
  Correlation Coefficient

Very good diversification

The 3 months correlation between Creative and City is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Creative Media Community 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 Creative Media 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 Creative Media Community 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 Creative Media i.e., Creative Media and City Office go up and down completely randomly.

Pair Corralation between Creative Media and City Office

Given the investment horizon of 90 days Creative Media Community is expected to under-perform the City Office. In addition to that, Creative Media is 1.72 times more volatile than City Office REIT. It trades about -0.13 of its total potential returns per unit of risk. City Office REIT is currently generating about 0.05 per unit of volatility. If you would invest  1,695  in City Office REIT on March 4, 2024 and sell it today you would earn a total of  65.00  from holding City Office REIT or generate 3.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Creative Media Community  vs.  City Office REIT

 Performance 
       Timeline  
Creative Media Community 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Creative Media Community has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
City Office REIT 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in City Office REIT are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, City Office is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Creative Media and City Office Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Creative Media and City Office

The main advantage of trading using opposite Creative Media and City Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Creative Media 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.
The idea behind Creative Media Community and City Office REIT 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.
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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