Correlation Between HP and Choice Properties
Can any of the company-specific risk be diversified away by investing in both HP and Choice Properties 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 HP and Choice Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HP Inc and Choice Properties Real, you can compare the effects of market volatilities on HP and Choice Properties 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 HP with a short position of Choice Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and Choice Properties.
Diversification Opportunities for HP and Choice Properties
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between HP and Choice is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and Choice Properties Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choice Properties Real and HP 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 HP Inc are associated (or correlated) with Choice Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choice Properties Real has no effect on the direction of HP i.e., HP and Choice Properties go up and down completely randomly.
Pair Corralation between HP and Choice Properties
Considering the 90-day investment horizon HP Inc is expected to generate 1.75 times more return on investment than Choice Properties. However, HP is 1.75 times more volatile than Choice Properties Real. It trades about 0.06 of its potential returns per unit of risk. Choice Properties Real is currently generating about -0.25 per unit of risk. If you would invest 3,742 in HP Inc on August 27, 2024 and sell it today you would earn a total of 71.00 from holding HP Inc or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
HP Inc vs. Choice Properties Real
Performance |
| Timeline |
| HP Inc |
| Choice Properties Real |
HP and Choice Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and Choice Properties
The main advantage of trading using opposite HP and Choice Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, Choice Properties 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 Choice Properties will offset losses from the drop in Choice Properties' long position.The idea behind HP Inc and Choice Properties Real pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Choice Properties vs. Smart REIT | Choice Properties vs. Phillips Edison Co | Choice Properties vs. Simon Property Group | Choice Properties vs. Inventrust Properties Corp |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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