Correlation Between British American and Healthpeak Properties
Can any of the company-specific risk be diversified away by investing in both British American and Healthpeak 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 British American and Healthpeak Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and Healthpeak Properties, you can compare the effects of market volatilities on British American and Healthpeak 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 British American with a short position of Healthpeak Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Healthpeak Properties.
Diversification Opportunities for British American and Healthpeak Properties
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between British and Healthpeak is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Healthpeak Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthpeak Properties and British American 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 British American Tobacco are associated (or correlated) with Healthpeak Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthpeak Properties has no effect on the direction of British American i.e., British American and Healthpeak Properties go up and down completely randomly.
Pair Corralation between British American and Healthpeak Properties
Assuming the 90 days trading horizon British American is expected to generate 1.35 times less return on investment than Healthpeak Properties. But when comparing it to its historical volatility, British American Tobacco is 2.27 times less risky than Healthpeak Properties. It trades about 0.03 of its potential returns per unit of risk. Healthpeak Properties is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 13,364 in Healthpeak Properties on September 12, 2024 and sell it today you would lose (52.00) from holding Healthpeak Properties or give up 0.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 75.1% |
| Values | Daily Returns |
British American Tobacco vs. Healthpeak Properties
Performance |
| Timeline |
| British American Tobacco |
| Healthpeak Properties |
British American and Healthpeak Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and Healthpeak Properties
The main advantage of trading using opposite British American and Healthpeak Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, Healthpeak 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 Healthpeak Properties will offset losses from the drop in Healthpeak Properties' long position.| British American vs. Fundo Investimento Imobiliario | British American vs. LESTE FDO INV | British American vs. Fras le SA | British American vs. Western Digital |
| Healthpeak Properties vs. Metalrgica Riosulense SA | Healthpeak Properties vs. British American Tobacco | Healthpeak Properties vs. Automatic Data Processing | Healthpeak Properties vs. Paycom Software |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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