Correlation Between EPR Properties and Hannon Armstrong

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

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

Diversification Opportunities for EPR Properties and Hannon Armstrong

0.51

Correlation Coefficient

EPR Properties  Hannon Armstrong

Very weak diversification

The 3 months correlation between EPR and Hannon is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding EPR Properties and Hannon Armstrong Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannon Armstrong Sus and EPR 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 EPR Properties are associated (or correlated) with Hannon Armstrong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannon Armstrong Sus has no effect on the direction of EPR Properties i.e., EPR Properties and Hannon Armstrong go up and down completely randomly.

Pair Corralation between EPR Properties and Hannon Armstrong

Assuming the 90 days trading horizon EPR Properties is expected to generate 0.34 times more return on investment than Hannon Armstrong. However, EPR Properties is 2.93 times less risky than Hannon Armstrong. It trades about -0.01 of its potential returns per unit of risk. Hannon Armstrong Sustainable is currently generating about -0.01 per unit of risk. If you would invest  2,229  in EPR Properties on August 31, 2024 and sell it today you would lose (21.00) from holding EPR Properties or give up 0.94% of portfolio value over 90 days.

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

EPR Properties  vs.  Hannon Armstrong Sustainable

EPR Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EPR Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, EPR Properties is not utilizing all of its potentials. The new stock price disturbance, may contribute to mid-run losses for the stockholders.

Hannon Armstrong Sus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hannon Armstrong Sustainable has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Hannon Armstrong is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with EPR Properties and Hannon Armstrong

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

The idea behind EPR Properties and Hannon Armstrong Sustainable 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 Commodity Directory module to find actively traded commodities issued by global exchanges.