Correlation Between SL Green and Highwoods Properties
Can any of the company-specific risk be diversified away by investing in both SL Green 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 SL Green and Highwoods Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SL Green Realty and Highwoods Properties, you can compare the effects of market volatilities on SL Green 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 SL Green with a short position of Highwoods Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and Highwoods Properties.
Diversification Opportunities for SL Green and Highwoods Properties
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SLG-PI and Highwoods is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and Highwoods Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highwoods Properties and SL Green 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 SL Green Realty 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 SL Green i.e., SL Green and Highwoods Properties go up and down completely randomly.
Pair Corralation between SL Green and Highwoods Properties
Assuming the 90 days trading horizon SL Green is expected to generate 1.15 times less return on investment than Highwoods Properties. But when comparing it to its historical volatility, SL Green Realty is 1.34 times less risky than Highwoods Properties. It trades about 0.05 of its potential returns per unit of risk. Highwoods Properties is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,403 in Highwoods Properties on August 28, 2024 and sell it today you would earn a total of 841.00 from holding Highwoods Properties or generate 35.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
SL Green Realty vs. Highwoods Properties
Performance |
| Timeline |
| SL Green Realty |
| Highwoods Properties |
SL Green and Highwoods Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SL Green and Highwoods Properties
The main advantage of trading using opposite SL Green and Highwoods Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green 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.| SL Green vs. Cousins Properties Incorporated | SL Green vs. Franklin Street Properties | SL Green vs. Creative Media Community | SL Green vs. Vornado Realty Trust |
| 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |