Correlation Between Essex Property and H2O Retailing
Can any of the company-specific risk be diversified away by investing in both Essex Property and H2O Retailing 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 Essex Property and H2O Retailing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Essex Property Trust and H2O Retailing, you can compare the effects of market volatilities on Essex Property and H2O Retailing 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 Essex Property with a short position of H2O Retailing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essex Property and H2O Retailing.
Diversification Opportunities for Essex Property and H2O Retailing
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Essex and H2O is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Essex Property Trust and H2O Retailing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H2O Retailing and Essex 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 Essex Property Trust are associated (or correlated) with H2O Retailing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H2O Retailing has no effect on the direction of Essex Property i.e., Essex Property and H2O Retailing go up and down completely randomly.
Pair Corralation between Essex Property and H2O Retailing
Assuming the 90 days horizon Essex Property Trust is expected to generate 0.49 times more return on investment than H2O Retailing. However, Essex Property Trust is 2.05 times less risky than H2O Retailing. It trades about 0.09 of its potential returns per unit of risk. H2O Retailing is currently generating about 0.04 per unit of risk. If you would invest 21,497 in Essex Property Trust on October 12, 2024 and sell it today you would earn a total of 4,803 from holding Essex Property Trust or generate 22.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Essex Property Trust vs. H2O Retailing
Performance |
| Timeline |
| Essex Property Trust |
| H2O Retailing |
Essex Property and H2O Retailing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Essex Property and H2O Retailing
The main advantage of trading using opposite Essex Property and H2O Retailing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essex Property position performs unexpectedly, H2O Retailing 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 H2O Retailing will offset losses from the drop in H2O Retailing's long position.| Essex Property vs. H2O Retailing | Essex Property vs. FAST RETAIL ADR | Essex Property vs. PICKN PAY STORES | Essex Property vs. OURGAME INTHOLDL 00005 |
| H2O Retailing vs. Charter Communications | H2O Retailing vs. China BlueChemical | H2O Retailing vs. TELECOM ITALIA | H2O Retailing vs. Telecom Argentina SA |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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