Correlation Between Camden Property and Essex Property
Can any of the company-specific risk be diversified away by investing in both Camden Property and Essex 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 Camden Property and Essex Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Camden Property Trust and Essex Property Trust, you can compare the effects of market volatilities on Camden Property and Essex 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 Camden Property with a short position of Essex Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Camden Property and Essex Property.
Diversification Opportunities for Camden Property and Essex Property
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Camden and Essex is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Camden Property Trust and Essex Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essex Property Trust and Camden Property 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 Camden Property Trust are associated (or correlated) with Essex Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essex Property Trust has no effect on the direction of Camden Property i.e., Camden Property and Essex Property go up and down completely randomly.
Pair Corralation between Camden Property and Essex Property
Considering the 90-day investment horizon Camden Property Trust is expected to generate 1.01 times more return on investment than Essex Property. However, Camden Property is 1.01 times more volatile than Essex Property Trust. It trades about 0.08 of its potential returns per unit of risk. Essex Property Trust is currently generating about 0.08 per unit of risk. If you would invest 9,760 in Camden Property Trust on August 24, 2024 and sell it today you would earn a total of 2,530 from holding Camden Property Trust or generate 25.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Camden Property Trust vs. Essex Property Trust
Performance |
| Timeline |
| Camden Property Trust |
| Essex Property Trust |
Camden Property and Essex Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Camden Property and Essex Property
The main advantage of trading using opposite Camden Property and Essex Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Camden Property position performs unexpectedly, Essex 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 Essex Property will offset losses from the drop in Essex Property's long position.| Camden Property vs. AvalonBay Communities | Camden Property vs. Essex Property Trust | Camden Property vs. Equity Residential | Camden Property vs. UDR Inc |
| Essex Property vs. Equity Residential | Essex Property vs. Mid America Apartment Communities | Essex Property vs. Camden Property Trust | Essex 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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