Correlation Between Impact Growth and Prime Office

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

By analyzing existing cross correlation between Impact Growth REIT and Prime Office Leasehold, you can compare the effects of market volatilities on Impact Growth and Prime 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 Impact Growth with a short position of Prime Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impact Growth and Prime Office.

Diversification Opportunities for Impact Growth and Prime Office

0.37

Correlation Coefficient

Impact Growth  Prime Office

Weak diversification

The 3 months correlation between Impact and Prime is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Impact Growth REIT and Prime Office Leasehold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Office Leasehold and Impact Growth 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 Impact Growth REIT are associated (or correlated) with Prime Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Office Leasehold has no effect on the direction of Impact Growth i.e., Impact Growth and Prime Office go up and down completely randomly.

Pair Corralation between Impact Growth and Prime Office

Assuming the 90 days trading horizon Impact Growth is expected to generate 1.23 times less return on investment than Prime Office. In addition to that, Impact Growth is 1.64 times more volatile than Prime Office Leasehold. It trades about 0.04 of its total potential returns per unit of risk. Prime Office Leasehold is currently generating about 0.09 per unit of volatility. If you would invest  554.00  in Prime Office Leasehold on April 24, 2025 and sell it today you would earn a total of  21.00  from holding Prime Office Leasehold or generate 3.79% return on investment over 90 days.

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

Impact Growth REIT  vs.  Prime Office Leasehold

Impact Growth REIT

Risk-Adjusted Performance

Insignificant

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

Prime Office Leasehold

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Prime Office Leasehold are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. Despite quite persistent forward-looking signals, Prime Office is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Impact Growth and Prime Office

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

The idea behind Impact Growth REIT and Prime Office Leasehold 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.