Correlation Between Office Properties and Creative Media

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

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

Diversification Opportunities for Office Properties and Creative Media

-0.62

Correlation Coefficient

Office Properties  Creative Media

Excellent diversification

The 3 months correlation between Office and Creative is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Office Properties Income and Creative Media Community in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creative Media Community and Office Properties 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 Office Properties Income are associated (or correlated) with Creative Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creative Media Community has no effect on the direction of Office Properties i.e., Office Properties and Creative Media go up and down completely randomly.

Pair Corralation between Office Properties and Creative Media

Considering the 90-day investment horizon Office Properties Income is expected to generate 1.99 times more return on investment than Creative Media. However, Office Properties is 1.99 times more volatile than Creative Media Community. It trades about 0.05 of its potential returns per unit of risk. Creative Media Community is currently generating about -0.36 per unit of risk. If you would invest  196.00  in Office Properties Income on February 1, 2024 and sell it today you would earn a total of  6.00  from holding Office Properties Income or generate 3.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Office Properties Income  vs.  Creative Media Community

Office Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Office Properties Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Creative Media Community

Risk-Adjusted Performance

0 of 100

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 comparatively stable fundamental indicators, Creative Media is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Office Properties and Creative Media

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

The idea behind Office Properties Income and Creative Media Community 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.