Correlation Between Great Portland and COUSINS PTIES

Can any of the company-specific risk be diversified away by investing in both Great Portland and COUSINS PTIES 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 Great Portland and COUSINS PTIES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Great Portland Estates and COUSINS PTIES INC, you can compare the effects of market volatilities on Great Portland and COUSINS PTIES 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 Great Portland with a short position of COUSINS PTIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Portland and COUSINS PTIES.

Diversification Opportunities for Great Portland and COUSINS PTIES

0.05

Correlation Coefficient

Great Portland  COUSINS PTIES

Significant diversification

The 3 months correlation between Great and COUSINS is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Great Portland Estates and COUSINS PTIES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COUSINS PTIES INC and Great Portland 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 Great Portland Estates are associated (or correlated) with COUSINS PTIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COUSINS PTIES INC has no effect on the direction of Great Portland i.e., Great Portland and COUSINS PTIES go up and down completely randomly.

Pair Corralation between Great Portland and COUSINS PTIES

Assuming the 90 days trading horizon Great Portland Estates is expected to generate 1.12 times more return on investment than COUSINS PTIES. However, Great Portland is 1.12 times more volatile than COUSINS PTIES INC. It trades about 0.05 of its potential returns per unit of risk. COUSINS PTIES INC is currently generating about -0.04 per unit of risk. If you would invest  342.00  in Great Portland Estates on December 29, 2024 and sell it today you would earn a total of  16.00  from holding Great Portland Estates or generate 4.68% return on investment over 90 days.

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

Great Portland Estates  vs.  COUSINS PTIES INC

Great Portland Estates

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Great Portland Estates are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking signals, Great Portland is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

COUSINS PTIES INC

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Great Portland and COUSINS PTIES

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

The idea behind Great Portland Estates and COUSINS PTIES INC 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.