Correlation Between Healthpeak Properties and Piedmont Office

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

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

Diversification Opportunities for Healthpeak Properties and Piedmont Office

0.79

Correlation Coefficient

Healthpeak Properties  Piedmont Office

Poor diversification

The 3 months correlation between Healthpeak and Piedmont is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Healthpeak Properties and Piedmont Office Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piedmont Office Realty and Healthpeak 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 Healthpeak Properties are associated (or correlated) with Piedmont Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piedmont Office Realty has no effect on the direction of Healthpeak Properties i.e., Healthpeak Properties and Piedmont Office go up and down completely randomly.

Pair Corralation between Healthpeak Properties and Piedmont Office

Considering the 90-day investment horizon Healthpeak Properties is expected to under-perform the Piedmont Office. But the stock apears to be less risky and, when comparing its historical volatility, Healthpeak Properties is 1.67 times less risky than Piedmont Office. The stock trades about -0.18 of its potential returns per unit of risk. The Piedmont Office Realty is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  921.00  in Piedmont Office Realty on October 6, 2024 and sell it today you would lose (15.00) from holding Piedmont Office Realty or give up 1.63% of portfolio value over 90 days.

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

Healthpeak Properties  vs.  Piedmont Office Realty

Healthpeak Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Healthpeak Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Healthpeak Properties is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Piedmont Office Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Piedmont Office Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Piedmont Office is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Healthpeak Properties and Piedmont Office

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

The idea behind Healthpeak Properties and Piedmont Office Realty 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.

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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.