Correlation Between Hannon Armstrong and EPR Properties

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

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

Diversification Opportunities for Hannon Armstrong and EPR Properties

0.59

Correlation Coefficient

Hannon Armstrong  EPR Properties

Very weak diversification

The 3 months correlation between Hannon and EPR is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Hannon Armstrong Sustainable and EPR Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPR Properties and Hannon Armstrong 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 Hannon Armstrong Sustainable are associated (or correlated) with EPR Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPR Properties has no effect on the direction of Hannon Armstrong i.e., Hannon Armstrong and EPR Properties go up and down completely randomly.

Pair Corralation between Hannon Armstrong and EPR Properties

Given the investment horizon of 90 days Hannon Armstrong Sustainable is expected to generate 1.36 times more return on investment than EPR Properties. However, Hannon Armstrong is 1.36 times more volatile than EPR Properties. It trades about 0.1 of its potential returns per unit of risk. EPR Properties is currently generating about 0.06 per unit of risk. If you would invest  2,671  in Hannon Armstrong Sustainable on December 28, 2024 and sell it today you would earn a total of  260.00  from holding Hannon Armstrong Sustainable or generate 9.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Hannon Armstrong Sustainable  vs.  EPR Properties

Hannon Armstrong Sus

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hannon Armstrong Sustainable are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Hannon Armstrong may actually be approaching a critical reversion point that can send shares even higher in April 2025.

EPR Properties

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EPR Properties are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, EPR Properties is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hannon Armstrong and EPR Properties

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

The idea behind Hannon Armstrong Sustainable and EPR 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.