Correlation Between Cousins Properties and Highwoods Properties

Can any of the company-specific risk be diversified away by investing in both Cousins 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 Cousins 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 Cousins Properties Incorporated and Highwoods Properties, you can compare the effects of market volatilities on Cousins 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 Cousins Properties with a short position of Highwoods Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cousins Properties and Highwoods Properties.

Diversification Opportunities for Cousins Properties and Highwoods Properties

0.48

Correlation Coefficient

Cousins Properties  Highwoods Properties

Very weak diversification

The 3 months correlation between Cousins and Highwoods is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Cousins Properties Incorporate and Highwoods Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highwoods 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 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 Cousins Properties i.e., Cousins Properties and Highwoods Properties go up and down completely randomly.

Pair Corralation between Cousins Properties and Highwoods Properties

Considering the 90-day investment horizon Cousins Properties Incorporated is expected to generate 1.02 times more return on investment than Highwoods Properties. However, Cousins Properties is 1.02 times more volatile than Highwoods Properties. It trades about 0.0 of its potential returns per unit of risk. Highwoods Properties is currently generating about -0.01 per unit of risk. If you would invest  2,978  in Cousins Properties Incorporated on December 29, 2024 and sell it today you would lose (14.00) from holding Cousins Properties Incorporated or give up 0.47% 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.  Highwoods Properties

Cousins Properties

Risk-Adjusted Performance

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.

Highwoods Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Highwoods Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Highwoods Properties is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Cousins Properties and Highwoods Properties

The main advantage of trading using opposite Cousins Properties and Highwoods Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cousins 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.

The idea behind Cousins Properties Incorporated and Highwoods 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 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.