Correlation Between Biogen and Healthpeak Properties
Can any of the company-specific risk be diversified away by investing in both Biogen 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 Biogen and Healthpeak Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biogen Inc and Healthpeak Properties, you can compare the effects of market volatilities on Biogen 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 Biogen with a short position of Healthpeak Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biogen and Healthpeak Properties.
Diversification Opportunities for Biogen and Healthpeak Properties
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Biogen and Healthpeak is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Biogen Inc and Healthpeak Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthpeak Properties and Biogen 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 Biogen Inc 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 Biogen i.e., Biogen and Healthpeak Properties go up and down completely randomly.
Pair Corralation between Biogen and Healthpeak Properties
Assuming the 90 days trading horizon Biogen Inc is expected to generate 1.45 times more return on investment than Healthpeak Properties. However, Biogen is 1.45 times more volatile than Healthpeak Properties. It trades about -0.12 of its potential returns per unit of risk. Healthpeak Properties is currently generating about -0.24 per unit of risk. If you would invest 14,220 in Biogen Inc on November 28, 2024 and sell it today you would lose (826.00) from holding Biogen Inc or give up 5.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Biogen Inc vs. Healthpeak Properties
Performance |
| Timeline |
| Biogen Inc |
| Healthpeak Properties |
Biogen and Healthpeak Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biogen and Healthpeak Properties
The main advantage of trading using opposite Biogen and Healthpeak Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biogen 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.| Biogen vs. DXC Technology | Biogen vs. Take Two Interactive Software | Biogen vs. Sumitomo Mitsui Financial | Biogen vs. Broadridge Financial Solutions, |
| Healthpeak Properties vs. Pure Storage, | Healthpeak Properties vs. Hormel Foods | Healthpeak Properties vs. Clover Health Investments, | Healthpeak Properties vs. Annaly Capital Management, |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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