Correlation Between Eastern and Hudson Pacific
Can any of the company-specific risk be diversified away by investing in both Eastern 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 Eastern and Hudson Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Co and Hudson Pacific Properties, you can compare the effects of market volatilities on Eastern 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 Eastern with a short position of Hudson Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern and Hudson Pacific.
Diversification Opportunities for Eastern and Hudson Pacific
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Eastern and Hudson is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Co 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 Eastern 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 Eastern Co 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 Eastern i.e., Eastern and Hudson Pacific go up and down completely randomly.
Pair Corralation between Eastern and Hudson Pacific
Considering the 90-day investment horizon Eastern Co is expected to generate 0.64 times more return on investment than Hudson Pacific. However, Eastern Co is 1.57 times less risky than Hudson Pacific. It trades about 0.01 of its potential returns per unit of risk. Hudson Pacific Properties is currently generating about -0.04 per unit of risk. If you would invest 2,767 in Eastern Co on November 28, 2024 and sell it today you would lose (14.00) from holding Eastern Co or give up 0.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Co vs. Hudson Pacific Properties
Performance |
| Timeline |
| Eastern |
| Hudson Pacific Properties |
Eastern and Hudson Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern and Hudson Pacific
The main advantage of trading using opposite Eastern and Hudson Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern 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.| Eastern vs. Timken Company | Eastern vs. Lincoln Electric Holdings | Eastern vs. Hillman Solutions Corp | Eastern vs. AB SKF |
| 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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