Correlation Between City Office and Hudson Pacific
Can any of the company-specific risk be diversified away by investing in both City Office and Hudson Pacific 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 Hudson Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between City Office REIT and Hudson Pacific Properties, you can compare the effects of market volatilities on City Office and Hudson Pacific 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 Hudson Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Office and Hudson Pacific.
Diversification Opportunities for City Office and Hudson Pacific
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between City and Hudson is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding City Office REIT and Hudson Pacific Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Pacific 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 REIT are associated (or correlated) with Hudson Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudson Pacific Properties has no effect on the direction of City Office i.e., City Office and Hudson Pacific go up and down completely randomly.
Pair Corralation between City Office and Hudson Pacific
Assuming the 90 days trading horizon City Office REIT is expected to generate 0.34 times more return on investment than Hudson Pacific. However, City Office REIT is 2.98 times less risky than Hudson Pacific. It trades about 0.07 of its potential returns per unit of risk. Hudson Pacific Properties is currently generating about -0.43 per unit of risk. If you would invest 1,839 in City Office REIT on August 24, 2024 and sell it today you would earn a total of 35.00 from holding City Office REIT or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
City Office REIT vs. Hudson Pacific Properties
Performance |
| Timeline |
| City Office REIT |
| Hudson Pacific Properties |
City Office and Hudson Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Office and Hudson Pacific
The main advantage of trading using opposite City Office and Hudson Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Office position performs unexpectedly, Hudson Pacific 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 Hudson Pacific will offset losses from the drop in Hudson Pacific's long position.| City Office vs. Vornado Realty Trust | City Office vs. Vornado Realty Trust | City Office vs. SL Green Realty | City Office vs. Hudson Pacific Properties |
| Hudson Pacific vs. Kilroy Realty Corp | Hudson Pacific vs. Highwoods Properties | Hudson Pacific vs. Cousins Properties Incorporated | Hudson Pacific vs. Piedmont Office Realty |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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