Correlation Between Hudson Pacific and City Office
Can any of the company-specific risk be diversified away by investing in both Hudson Pacific and City Office 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 Hudson Pacific and City Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hudson Pacific Properties and City Office REIT, you can compare the effects of market volatilities on Hudson Pacific and City Office 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 Hudson Pacific with a short position of City Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hudson Pacific and City Office.
Diversification Opportunities for Hudson Pacific and City Office
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hudson and City is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Pacific Properties and City Office REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Office REIT and Hudson Pacific 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 Hudson Pacific Properties are associated (or correlated) with City Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Office REIT has no effect on the direction of Hudson Pacific i.e., Hudson Pacific and City Office go up and down completely randomly.
Pair Corralation between Hudson Pacific and City Office
Assuming the 90 days trading horizon Hudson Pacific Properties is expected to generate 1.4 times more return on investment than City Office. However, Hudson Pacific is 1.4 times more volatile than City Office REIT. It trades about 0.12 of its potential returns per unit of risk. City Office REIT is currently generating about 0.02 per unit of risk. If you would invest 1,204 in Hudson Pacific Properties on August 23, 2024 and sell it today you would earn a total of 182.00 from holding Hudson Pacific Properties or generate 15.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hudson Pacific Properties vs. City Office REIT
Performance |
| Timeline |
| Hudson Pacific Properties |
| City Office REIT |
Hudson Pacific and City Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hudson Pacific and City Office
The main advantage of trading using opposite Hudson Pacific and City Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hudson Pacific position performs unexpectedly, City Office 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 City Office will offset losses from the drop in City Office's long position.| Hudson Pacific vs. Vornado Realty Trust | Hudson Pacific vs. Vornado Realty Trust | Hudson Pacific vs. SL Green Realty | Hudson Pacific vs. Vornado Realty Trust |
| City Office vs. Vornado Realty Trust | City Office vs. Vornado Realty Trust | City Office vs. SL Green Realty | City Office vs. Hudson Pacific Properties |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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