Correlation Between Hudson Pacific and Eastern
Can any of the company-specific risk be diversified away by investing in both Hudson Pacific and Eastern 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 Eastern 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 Eastern Co, you can compare the effects of market volatilities on Hudson Pacific and Eastern 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 Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hudson Pacific and Eastern.
Diversification Opportunities for Hudson Pacific and Eastern
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hudson and Eastern is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Pacific Properties and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern 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 Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of Hudson Pacific i.e., Hudson Pacific and Eastern go up and down completely randomly.
Pair Corralation between Hudson Pacific and Eastern
Considering the 90-day investment horizon Hudson Pacific Properties is expected to under-perform the Eastern. In addition to that, Hudson Pacific is 1.93 times more volatile than Eastern Co. It trades about -0.08 of its total potential returns per unit of risk. Eastern Co is currently generating about -0.12 per unit of volatility. If you would invest 3,102 in Eastern Co on September 1, 2024 and sell it today you would lose (230.00) from holding Eastern Co or give up 7.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hudson Pacific Properties vs. Eastern Co
Performance |
| Timeline |
| Hudson Pacific Properties |
| Eastern |
Hudson Pacific and Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hudson Pacific and Eastern
The main advantage of trading using opposite Hudson Pacific and Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hudson Pacific position performs unexpectedly, Eastern 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 Eastern will offset losses from the drop in Eastern's long position.| Hudson Pacific vs. Douglas Emmett | Hudson Pacific vs. Vornado Realty Trust | Hudson Pacific vs. Highwoods Properties | Hudson Pacific vs. Piedmont Office Realty |
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.
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