Correlation Between Office Properties and Highwoods Properties
Can any of the company-specific risk be diversified away by investing in both Office Properties and Highwoods 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 Office Properties and Highwoods Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Office Properties Income and Highwoods Properties, you can compare the effects of market volatilities on Office Properties and Highwoods 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 Office Properties with a short position of Highwoods Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Office Properties and Highwoods Properties.
Diversification Opportunities for Office Properties and Highwoods Properties
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Office and Highwoods is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Office Properties Income and Highwoods Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highwoods Properties and Office Properties 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 Office Properties Income are associated (or correlated) with Highwoods Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highwoods Properties has no effect on the direction of Office Properties i.e., Office Properties and Highwoods Properties go up and down completely randomly.
Pair Corralation between Office Properties and Highwoods Properties
Considering the 90-day investment horizon Office Properties Income is expected to under-perform the Highwoods Properties. In addition to that, Office Properties is 2.19 times more volatile than Highwoods Properties. It trades about -0.16 of its total potential returns per unit of risk. Highwoods Properties is currently generating about 0.02 per unit of volatility. If you would invest 3,008 in Highwoods Properties on October 21, 2024 and sell it today you would earn a total of 14.00 from holding Highwoods Properties or generate 0.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Office Properties Income vs. Highwoods Properties
Performance |
| Timeline |
| Office Properties Income |
| Highwoods Properties |
Office Properties and Highwoods Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Office Properties and Highwoods Properties
The main advantage of trading using opposite Office Properties and Highwoods Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Office Properties position performs unexpectedly, Highwoods 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 Highwoods Properties will offset losses from the drop in Highwoods Properties' long position.| Office Properties vs. Hudson Pacific Properties | Office Properties vs. Piedmont Office Realty | Office Properties vs. City Office | Office Properties vs. Kilroy Realty Corp |
| Highwoods Properties vs. Piedmont Office Realty | Highwoods Properties vs. Douglas Emmett | Highwoods Properties vs. Kilroy Realty Corp | Highwoods Properties 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 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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