Correlation Between Prime Office and Impact Growth

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

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

Diversification Opportunities for Prime Office and Impact Growth

0.37

Correlation Coefficient

Prime Office  Impact Growth

Weak diversification

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

Pair Corralation between Prime Office and Impact Growth

Assuming the 90 days trading horizon Prime Office Leasehold is expected to generate 0.61 times more return on investment than Impact Growth. However, Prime Office Leasehold is 1.64 times less risky than Impact Growth. It trades about 0.09 of its potential returns per unit of risk. Impact Growth REIT is currently generating about 0.04 per unit of risk. 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

Prime Office Leasehold  vs.  Impact Growth REIT

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.

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.

Pair Trading with Prime Office and Impact Growth

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

The idea behind Prime Office Leasehold and Impact Growth 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.