Correlation Between AvalonBay Communities and Camden Property
Can any of the company-specific risk be diversified away by investing in both AvalonBay Communities and Camden Property 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 AvalonBay Communities and Camden Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AvalonBay Communities and Camden Property Trust, you can compare the effects of market volatilities on AvalonBay Communities and Camden Property 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 AvalonBay Communities with a short position of Camden Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of AvalonBay Communities and Camden Property.
Diversification Opportunities for AvalonBay Communities and Camden Property
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AvalonBay and Camden is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding AvalonBay Communities and Camden Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camden Property Trust and AvalonBay Communities 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 AvalonBay Communities are associated (or correlated) with Camden Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camden Property Trust has no effect on the direction of AvalonBay Communities i.e., AvalonBay Communities and Camden Property go up and down completely randomly.
Pair Corralation between AvalonBay Communities and Camden Property
Considering the 90-day investment horizon AvalonBay Communities is expected to generate 0.91 times more return on investment than Camden Property. However, AvalonBay Communities is 1.1 times less risky than Camden Property. It trades about 0.05 of its potential returns per unit of risk. Camden Property Trust is currently generating about -0.11 per unit of risk. If you would invest 21,707 in AvalonBay Communities on November 2, 2024 and sell it today you would earn a total of 281.00 from holding AvalonBay Communities or generate 1.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AvalonBay Communities vs. Camden Property Trust
Performance |
| Timeline |
| AvalonBay Communities |
| Camden Property Trust |
AvalonBay Communities and Camden Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AvalonBay Communities and Camden Property
The main advantage of trading using opposite AvalonBay Communities and Camden Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AvalonBay Communities position performs unexpectedly, Camden Property 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 Camden Property will offset losses from the drop in Camden Property's long position.| AvalonBay Communities vs. Essex Property Trust | AvalonBay Communities vs. UDR Inc | AvalonBay Communities vs. Mid America Apartment Communities | AvalonBay Communities vs. Camden Property Trust |
| Camden Property vs. AvalonBay Communities | Camden Property vs. Essex Property Trust | Camden Property vs. Equity Residential | Camden Property vs. UDR Inc |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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