Correlation Between Cousins Properties and Piedmont Office
Can any of the company-specific risk be diversified away by investing in both Cousins Properties and Piedmont Office 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 Cousins Properties and Piedmont Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cousins Properties Incorporated and Piedmont Office Realty, you can compare the effects of market volatilities on Cousins Properties and Piedmont Office 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 Cousins Properties with a short position of Piedmont Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cousins Properties and Piedmont Office.
Diversification Opportunities for Cousins Properties and Piedmont Office
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cousins and Piedmont is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cousins Properties Incorporate and Piedmont Office Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piedmont Office Realty and Cousins Properties 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 Cousins Properties Incorporated are associated (or correlated) with Piedmont Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piedmont Office Realty has no effect on the direction of Cousins Properties i.e., Cousins Properties and Piedmont Office go up and down completely randomly.
Pair Corralation between Cousins Properties and Piedmont Office
Considering the 90-day investment horizon Cousins Properties Incorporated is expected to generate 0.69 times more return on investment than Piedmont Office. However, Cousins Properties Incorporated is 1.45 times less risky than Piedmont Office. It trades about 0.04 of its potential returns per unit of risk. Piedmont Office Realty is currently generating about -0.3 per unit of risk. If you would invest 3,125 in Cousins Properties Incorporated on August 24, 2024 and sell it today you would earn a total of 27.00 from holding Cousins Properties Incorporated or generate 0.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cousins Properties Incorporate vs. Piedmont Office Realty
Performance |
| Timeline |
| Cousins Properties |
| Piedmont Office Realty |
Cousins Properties and Piedmont Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cousins Properties and Piedmont Office
The main advantage of trading using opposite Cousins Properties and Piedmont Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cousins Properties position performs unexpectedly, Piedmont Office 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 Piedmont Office will offset losses from the drop in Piedmont Office's long position.| Cousins Properties vs. Highwoods Properties | Cousins Properties vs. Douglas Emmett | Cousins Properties vs. Equity Commonwealth | Cousins Properties vs. Kilroy Realty Corp |
| Piedmont Office vs. Highwoods Properties | Piedmont Office vs. Douglas Emmett | Piedmont Office vs. Kilroy Realty Corp | Piedmont Office vs. Cousins Properties Incorporated |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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