Correlation Between Corporate Travel and Corporate Office

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

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

Diversification Opportunities for Corporate Travel and Corporate Office

0.69

Correlation Coefficient

Corporate Travel  Corporate Office

Poor diversification

The 3 months correlation between Corporate and Corporate is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Travel Management and Corporate Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Office Pro and Corporate Travel 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 Corporate Travel Management are associated (or correlated) with Corporate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Office Pro has no effect on the direction of Corporate Travel i.e., Corporate Travel and Corporate Office go up and down completely randomly.

Pair Corralation between Corporate Travel and Corporate Office

Assuming the 90 days trading horizon Corporate Travel Management is expected to generate 2.25 times more return on investment than Corporate Office. However, Corporate Travel is 2.25 times more volatile than Corporate Office Properties. It trades about 0.05 of its potential returns per unit of risk. Corporate Office Properties is currently generating about -0.09 per unit of risk. If you would invest  755.00  in Corporate Travel Management on April 3, 2025 and sell it today you would earn a total of  15.00  from holding Corporate Travel Management or generate 1.99% return on investment over 90 days.

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

Corporate Travel Management  vs.  Corporate Office Properties

Corporate Travel Man

Risk-Adjusted Performance

Very Weak

Over the last 90 days Corporate Travel Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Corporate Travel is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Corporate Office Pro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Corporate Office Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Corporate Office is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Corporate Travel and Corporate Office

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

The idea behind Corporate Travel Management and Corporate Office Properties 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.