Correlation Between Highwoods Properties and Equity Commonwealth
Can any of the company-specific risk be diversified away by investing in both Highwoods Properties and Equity Commonwealth 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 Highwoods Properties and Equity Commonwealth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highwoods Properties and Equity Commonwealth, you can compare the effects of market volatilities on Highwoods Properties and Equity Commonwealth 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 Highwoods Properties with a short position of Equity Commonwealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highwoods Properties and Equity Commonwealth.
Diversification Opportunities for Highwoods Properties and Equity Commonwealth
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Highwoods and Equity is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Highwoods Properties and Equity Commonwealth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Commonwealth and Highwoods 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 Highwoods Properties are associated (or correlated) with Equity Commonwealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Commonwealth has no effect on the direction of Highwoods Properties i.e., Highwoods Properties and Equity Commonwealth go up and down completely randomly.
Pair Corralation between Highwoods Properties and Equity Commonwealth
Considering the 90-day investment horizon Highwoods Properties is expected to generate 0.71 times more return on investment than Equity Commonwealth. However, Highwoods Properties is 1.41 times less risky than Equity Commonwealth. It trades about 0.02 of its potential returns per unit of risk. Equity Commonwealth is currently generating about -0.12 per unit of risk. If you would invest 3,008 in Highwoods Properties on October 21, 2024 and sell it today you would earn a total of 14.00 from holding Highwoods Properties or generate 0.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highwoods Properties vs. Equity Commonwealth
Performance |
| Timeline |
| Highwoods Properties |
| Equity Commonwealth |
Highwoods Properties and Equity Commonwealth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highwoods Properties and Equity Commonwealth
The main advantage of trading using opposite Highwoods Properties and Equity Commonwealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highwoods Properties position performs unexpectedly, Equity Commonwealth 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 Equity Commonwealth will offset losses from the drop in Equity Commonwealth's long position.| Highwoods Properties vs. Piedmont Office Realty | Highwoods Properties vs. Douglas Emmett | Highwoods Properties vs. Kilroy Realty Corp | Highwoods Properties vs. Hudson Pacific Properties |
| Equity Commonwealth vs. Hudson Pacific Properties | Equity Commonwealth vs. SL Green Realty | Equity Commonwealth vs. Vornado Realty Trust | Equity Commonwealth vs. Vornado Realty Trust |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |