Correlation Between Equity Commonwealth and Postal Realty
Can any of the company-specific risk be diversified away by investing in both Equity Commonwealth and Postal Realty 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 Equity Commonwealth and Postal Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Commonwealth and Postal Realty Trust, you can compare the effects of market volatilities on Equity Commonwealth and Postal Realty 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 Equity Commonwealth with a short position of Postal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Commonwealth and Postal Realty.
Diversification Opportunities for Equity Commonwealth and Postal Realty
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Equity and Postal is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Equity Commonwealth and Postal Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Realty Trust and Equity Commonwealth 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 Equity Commonwealth are associated (or correlated) with Postal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Realty Trust has no effect on the direction of Equity Commonwealth i.e., Equity Commonwealth and Postal Realty go up and down completely randomly.
Pair Corralation between Equity Commonwealth and Postal Realty
Considering the 90-day investment horizon Equity Commonwealth is expected to under-perform the Postal Realty. But the stock apears to be less risky and, when comparing its historical volatility, Equity Commonwealth is 1.31 times less risky than Postal Realty. The stock trades about -0.01 of its potential returns per unit of risk. The Postal Realty Trust is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,338 in Postal Realty Trust on August 24, 2024 and sell it today you would earn a total of 55.00 from holding Postal Realty Trust or generate 4.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Commonwealth vs. Postal Realty Trust
Performance |
| Timeline |
| Equity Commonwealth |
| Postal Realty Trust |
Equity Commonwealth and Postal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Commonwealth and Postal Realty
The main advantage of trading using opposite Equity Commonwealth and Postal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Commonwealth position performs unexpectedly, Postal Realty 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 Postal Realty will offset losses from the drop in Postal Realty's long position.| Equity Commonwealth vs. Hudson Pacific Properties | Equity Commonwealth vs. SL Green Realty | Equity Commonwealth vs. Vornado Realty Trust | Equity Commonwealth vs. Vornado Realty Trust |
| Postal Realty vs. Cousins Properties Incorporated | Postal Realty vs. Highwoods Properties | Postal Realty vs. Douglas Emmett | Postal Realty vs. Equity Commonwealth |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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