Correlation Between City Office and VICI Properties

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

By analyzing existing cross correlation between City Office and VICI Properties, you can compare the effects of market volatilities on City Office and VICI Properties 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 VICI Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Office and VICI Properties.

Diversification Opportunities for City Office and VICI Properties

0.41

Correlation Coefficient

City Office  VICI Properties

Very weak diversification

The 3 months correlation between City and VICI is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding City Office and VICI Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VICI Properties 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 are associated (or correlated) with VICI Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VICI Properties has no effect on the direction of City Office i.e., City Office and VICI Properties go up and down completely randomly.

Pair Corralation between City Office and VICI Properties

Considering the 90-day investment horizon City Office is expected to generate 2.49 times more return on investment than VICI Properties. However, City Office is 2.49 times more volatile than VICI Properties. It trades about 0.14 of its potential returns per unit of risk. VICI Properties is currently generating about -0.53 per unit of risk. If you would invest  508.00  in City Office on September 22, 2024 and sell it today you would earn a total of  37.00  from holding City Office or generate 7.28% return on investment over 90 days.

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

City Office  vs.  VICI Properties

City Office

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days City Office has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, City Office is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

VICI Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VICI Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with City Office and VICI Properties

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

The idea behind City Office and VICI 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.

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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.