Correlation Between Hudson Pacific and Brandywine Realty

Can any of the company-specific risk be diversified away by investing in both Hudson Pacific and Brandywine Realty 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 Brandywine Realty 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 Brandywine Realty Trust, you can compare the effects of market volatilities on Hudson Pacific and Brandywine Realty 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 Brandywine Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hudson Pacific and Brandywine Realty.

Diversification Opportunities for Hudson Pacific and Brandywine Realty

0.45

Correlation Coefficient

Hudson Pacific  Brandywine Realty

Very weak diversification

The 3 months correlation between Hudson and Brandywine is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Pacific Properties and Brandywine Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandywine Realty Trust 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 Brandywine Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandywine Realty Trust has no effect on the direction of Hudson Pacific i.e., Hudson Pacific and Brandywine Realty go up and down completely randomly.

Pair Corralation between Hudson Pacific and Brandywine Realty

Considering the 90-day investment horizon Hudson Pacific Properties is expected to under-perform the Brandywine Realty. In addition to that, Hudson Pacific is 2.19 times more volatile than Brandywine Realty Trust. It trades about -0.06 of its total potential returns per unit of risk. Brandywine Realty Trust is currently generating about -0.07 per unit of volatility. If you would invest  544.00  in Brandywine Realty Trust on November 29, 2024 and sell it today you would lose (56.00) from holding Brandywine Realty Trust or give up 10.29% of portfolio value over 90 days.

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

Hudson Pacific Properties  vs.  Brandywine Realty Trust

Hudson Pacific Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hudson Pacific Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Brandywine Realty Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brandywine Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Hudson Pacific and Brandywine Realty

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

The idea behind Hudson Pacific Properties and Brandywine Realty Trust 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.