Correlation Between Hudson Pacific and Alexandria Real

Can any of the company-specific risk be diversified away by investing in both Hudson Pacific and Alexandria Real 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 Hudson Pacific and Alexandria Real into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hudson Pacific Properties and Alexandria Real Estate, you can compare the effects of market volatilities on Hudson Pacific and Alexandria Real 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 Hudson Pacific with a short position of Alexandria Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hudson Pacific and Alexandria Real.

Diversification Opportunities for Hudson Pacific and Alexandria Real

0.23

Correlation Coefficient

Hudson Pacific  Alexandria Real

Modest diversification

The 3 months correlation between Hudson and Alexandria is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Pacific Properties and Alexandria Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alexandria Real Estate and Hudson Pacific 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 Hudson Pacific Properties are associated (or correlated) with Alexandria Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alexandria Real Estate has no effect on the direction of Hudson Pacific i.e., Hudson Pacific and Alexandria Real go up and down completely randomly.

Pair Corralation between Hudson Pacific and Alexandria Real

Considering the 90-day investment horizon Hudson Pacific Properties is expected to generate 2.71 times more return on investment than Alexandria Real. However, Hudson Pacific is 2.71 times more volatile than Alexandria Real Estate. It trades about 0.04 of its potential returns per unit of risk. Alexandria Real Estate is currently generating about 0.0 per unit of risk. If you would invest  289.00  in Hudson Pacific Properties on December 29, 2024 and sell it today you would earn a total of  12.00  from holding Hudson Pacific Properties or generate 4.15% return on investment over 90 days.

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

Hudson Pacific Properties  vs.  Alexandria Real Estate

Hudson Pacific Properties

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hudson Pacific Properties are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Hudson Pacific may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Alexandria Real Estate

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Hudson Pacific and Alexandria Real

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

The idea behind Hudson Pacific Properties and Alexandria Real Estate 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.