Correlation Between Apple and CENTURIA OFFICE

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

By analyzing existing cross correlation between Apple Inc and CENTURIA OFFICE REIT, you can compare the effects of market volatilities on Apple and CENTURIA 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 Apple with a short position of CENTURIA OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and CENTURIA OFFICE.

Diversification Opportunities for Apple and CENTURIA OFFICE

0.28

Correlation Coefficient

Apple  CENTURIA OFFICE

Modest diversification

The 3 months correlation between Apple and CENTURIA is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc and CENTURIA OFFICE REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTURIA OFFICE REIT and Apple 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 Apple Inc are associated (or correlated) with CENTURIA OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTURIA OFFICE REIT has no effect on the direction of Apple i.e., Apple and CENTURIA OFFICE go up and down completely randomly.

Pair Corralation between Apple and CENTURIA OFFICE

Assuming the 90 days trading horizon Apple Inc is expected to generate 0.73 times more return on investment than CENTURIA OFFICE. However, Apple Inc is 1.38 times less risky than CENTURIA OFFICE. It trades about 0.59 of its potential returns per unit of risk. CENTURIA OFFICE REIT is currently generating about 0.06 per unit of risk. If you would invest  20,296  in Apple Inc on September 5, 2024 and sell it today you would earn a total of  2,654  from holding Apple Inc or generate 13.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Apple Inc  vs.  CENTURIA OFFICE REIT

Apple Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental indicators, Apple sustained solid returns over the last few months and may actually be approaching a breakup point.

CENTURIA OFFICE REIT

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CENTURIA OFFICE REIT are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CENTURIA OFFICE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Apple and CENTURIA OFFICE

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

The idea behind Apple Inc and CENTURIA 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.