Correlation Between CITY OFFICE and Neinor Homes

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

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

Diversification Opportunities for CITY OFFICE and Neinor Homes

0.82

Correlation Coefficient

CITY OFFICE  Neinor Homes

Very poor diversification

The 3 months correlation between CITY and Neinor is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding CITY OFFICE REIT and Neinor Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neinor Homes SA and CITY 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 CITY OFFICE REIT are associated (or correlated) with Neinor Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neinor Homes SA has no effect on the direction of CITY OFFICE i.e., CITY OFFICE and Neinor Homes go up and down completely randomly.

Pair Corralation between CITY OFFICE and Neinor Homes

Assuming the 90 days horizon CITY OFFICE is expected to generate 2.66 times less return on investment than Neinor Homes. But when comparing it to its historical volatility, CITY OFFICE REIT is 1.43 times less risky than Neinor Homes. It trades about 0.08 of its potential returns per unit of risk. Neinor Homes SA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,384  in Neinor Homes SA on April 23, 2025 and sell it today you would earn a total of  352.00  from holding Neinor Homes SA or generate 25.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

CITY OFFICE REIT  vs.  Neinor Homes SA

CITY OFFICE REIT

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CITY OFFICE REIT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, CITY OFFICE may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Neinor Homes SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neinor Homes SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Neinor Homes unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CITY OFFICE and Neinor Homes

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

The idea behind CITY OFFICE REIT and Neinor Homes SA 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.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.