Correlation Between Hudson Pacific and Bank of America
Can any of the company-specific risk be diversified away by investing in both Hudson Pacific and Bank of America 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 Bank of America 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 Bank of America, you can compare the effects of market volatilities on Hudson Pacific and Bank of America 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 Bank of America. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hudson Pacific and Bank of America.
Diversification Opportunities for Hudson Pacific and Bank of America
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hudson and Bank is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Pacific Properties and Bank of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of America 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 Bank of America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of America has no effect on the direction of Hudson Pacific i.e., Hudson Pacific and Bank of America go up and down completely randomly.
Pair Corralation between Hudson Pacific and Bank of America
Considering the 90-day investment horizon Hudson Pacific Properties is expected to under-perform the Bank of America. In addition to that, Hudson Pacific is 4.62 times more volatile than Bank of America. It trades about -0.04 of its total potential returns per unit of risk. Bank of America is currently generating about 0.02 per unit of volatility. If you would invest 1,696 in Bank of America on October 25, 2024 and sell it today you would earn a total of 116.00 from holding Bank of America or generate 6.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Hudson Pacific Properties vs. Bank of America
Performance |
| Timeline |
| Hudson Pacific Properties |
| Bank of America |
Hudson Pacific and Bank of America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hudson Pacific and Bank of America
The main advantage of trading using opposite Hudson Pacific and Bank of America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hudson Pacific position performs unexpectedly, Bank of America 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 Bank of America will offset losses from the drop in Bank of America's long position.| Hudson Pacific vs. Kilroy Realty Corp | Hudson Pacific vs. Highwoods Properties | Hudson Pacific vs. Cousins Properties Incorporated | Hudson Pacific vs. Piedmont Office Realty |
| Bank of America vs. Bank of America | Bank of America vs. Bank of America | Bank of America vs. JPMorgan Chase Co | Bank of America vs. Wells Fargo |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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