Correlation Between Cousins Properties and COPT Defense

Can any of the company-specific risk be diversified away by investing in both Cousins Properties and COPT Defense 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 Cousins Properties and COPT Defense into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cousins Properties Incorporated and COPT Defense Properties, you can compare the effects of market volatilities on Cousins Properties and COPT Defense 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 Cousins Properties with a short position of COPT Defense. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cousins Properties and COPT Defense.

Diversification Opportunities for Cousins Properties and COPT Defense

0.57

Correlation Coefficient

Cousins Properties  COPT Defense

Very weak diversification

The 3 months correlation between Cousins and COPT is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cousins Properties Incorporate and COPT Defense Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COPT Defense Properties and Cousins 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 Cousins Properties Incorporated are associated (or correlated) with COPT Defense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COPT Defense Properties has no effect on the direction of Cousins Properties i.e., Cousins Properties and COPT Defense go up and down completely randomly.

Pair Corralation between Cousins Properties and COPT Defense

Considering the 90-day investment horizon Cousins Properties Incorporated is expected to generate 1.19 times more return on investment than COPT Defense. However, Cousins Properties is 1.19 times more volatile than COPT Defense Properties. It trades about 0.0 of its potential returns per unit of risk. COPT Defense Properties is currently generating about -0.08 per unit of risk. If you would invest  3,091  in Cousins Properties Incorporated on October 21, 2024 and sell it today you would lose (28.00) from holding Cousins Properties Incorporated or give up 0.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Cousins Properties Incorporate  vs.  COPT Defense Properties

Cousins Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cousins Properties Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Cousins Properties is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

COPT Defense Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COPT Defense Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental indicators, COPT Defense is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Cousins Properties and COPT Defense

The main advantage of trading using opposite Cousins Properties and COPT Defense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cousins Properties position performs unexpectedly, COPT Defense 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 COPT Defense will offset losses from the drop in COPT Defense's long position.

The idea behind Cousins Properties Incorporated and COPT Defense Properties 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.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.