Correlation Between H2O Retailing and Essex Property
Can any of the company-specific risk be diversified away by investing in both H2O Retailing and Essex Property 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 H2O Retailing and Essex Property into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H2O Retailing and Essex Property Trust, you can compare the effects of market volatilities on H2O Retailing and Essex Property 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 H2O Retailing with a short position of Essex Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of H2O Retailing and Essex Property.
Diversification Opportunities for H2O Retailing and Essex Property
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between H2O and Essex is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding H2O Retailing and Essex Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essex Property Trust and H2O Retailing 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 H2O Retailing are associated (or correlated) with Essex Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essex Property Trust has no effect on the direction of H2O Retailing i.e., H2O Retailing and Essex Property go up and down completely randomly.
Pair Corralation between H2O Retailing and Essex Property
Assuming the 90 days horizon H2O Retailing is expected to generate 1.24 times more return on investment than Essex Property. However, H2O Retailing is 1.24 times more volatile than Essex Property Trust. It trades about 0.03 of its potential returns per unit of risk. Essex Property Trust is currently generating about -0.21 per unit of risk. If you would invest 1,340 in H2O Retailing on October 11, 2024 and sell it today you would earn a total of 10.00 from holding H2O Retailing or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
H2O Retailing vs. Essex Property Trust
Performance |
| Timeline |
| H2O Retailing |
| Essex Property Trust |
H2O Retailing and Essex Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H2O Retailing and Essex Property
The main advantage of trading using opposite H2O Retailing and Essex Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H2O Retailing position performs unexpectedly, Essex Property 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 Essex Property will offset losses from the drop in Essex Property's long position.| H2O Retailing vs. Charter Communications | H2O Retailing vs. China BlueChemical | H2O Retailing vs. TELECOM ITALIA | H2O Retailing vs. Telecom Argentina SA |
| Essex Property vs. H2O Retailing | Essex Property vs. FAST RETAIL ADR | Essex Property vs. PICKN PAY STORES | Essex Property vs. OURGAME INTHOLDL 00005 |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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