Correlation Between Hyster Yale and Essex Property

Can any of the company-specific risk be diversified away by investing in both Hyster Yale and Essex Property 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 Hyster Yale and Essex Property into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hyster Yale Materials Handling and Essex Property Trust, you can compare the effects of market volatilities on Hyster Yale and Essex Property 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 Hyster Yale with a short position of Essex Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hyster Yale and Essex Property.

Diversification Opportunities for Hyster Yale and Essex Property

0.53

Correlation Coefficient

Hyster Yale  Essex Property

Very weak diversification

The 3 months correlation between Hyster and Essex is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hyster Yale Materials Handling and Essex Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essex Property Trust and Hyster Yale 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 Hyster Yale Materials Handling are associated (or correlated) with Essex Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essex Property Trust has no effect on the direction of Hyster Yale i.e., Hyster Yale and Essex Property go up and down completely randomly.

Pair Corralation between Hyster Yale and Essex Property

Assuming the 90 days trading horizon Hyster Yale Materials Handling is expected to under-perform the Essex Property. In addition to that, Hyster Yale is 1.44 times more volatile than Essex Property Trust. It trades about -0.02 of its total potential returns per unit of risk. Essex Property Trust is currently generating about 0.07 per unit of volatility. If you would invest  28,442  in Essex Property Trust on December 3, 2024 and sell it today you would earn a total of  1,468  from holding Essex Property Trust or generate 5.16% return on investment over 90 days.

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

Hyster Yale Materials Handling  vs.  Essex Property Trust

Hyster Yale Materials

Risk-Adjusted Performance

Very Weak

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

Essex Property Trust

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Essex Property Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Essex Property is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hyster Yale and Essex Property

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

The idea behind Hyster Yale Materials Handling and Essex Property 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.