Correlation Between Four Corners and CoStar

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

By analyzing existing cross correlation between Four Corners Property and CoStar Group, you can compare the effects of market volatilities on Four Corners and CoStar 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 Four Corners with a short position of CoStar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Four Corners and CoStar.

Diversification Opportunities for Four Corners and CoStar

-0.43

Correlation Coefficient

Four Corners  CoStar

Very good diversification

The 3 months correlation between Four and CoStar is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Four Corners Property and CoStar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoStar Group and Four Corners 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 Four Corners Property are associated (or correlated) with CoStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoStar Group has no effect on the direction of Four Corners i.e., Four Corners and CoStar go up and down completely randomly.

Pair Corralation between Four Corners and CoStar

Given the investment horizon of 90 days Four Corners Property is expected to under-perform the CoStar. But the stock apears to be less risky and, when comparing its historical volatility, Four Corners Property is 1.6 times less risky than CoStar. The stock trades about -0.06 of its potential returns per unit of risk. The CoStar Group is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  7,658  in CoStar Group on May 1, 2025 and sell it today you would earn a total of  1,901  from holding CoStar Group or generate 24.82% return on investment over 90 days.

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

Four Corners Property  vs.  CoStar Group

Four Corners Property

Risk-Adjusted Performance

Very Weak

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

CoStar Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CoStar Group are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting technical and fundamental indicators, CoStar reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Four Corners and CoStar

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

The idea behind Four Corners Property and CoStar Group 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.