Correlation Between Seagate Technology and Healthpeak Properties

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

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

Diversification Opportunities for Seagate Technology and Healthpeak Properties

0.28

Correlation Coefficient

Seagate Technology  Healthpeak Properties

Modest diversification

The 3 months correlation between Seagate and Healthpeak is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Seagate Technology Holdings and Healthpeak Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthpeak Properties and Seagate Technology 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 Seagate Technology Holdings are associated (or correlated) with Healthpeak Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthpeak Properties has no effect on the direction of Seagate Technology i.e., Seagate Technology and Healthpeak Properties go up and down completely randomly.

Pair Corralation between Seagate Technology and Healthpeak Properties

Assuming the 90 days trading horizon Seagate Technology Holdings is expected to generate 1.3 times more return on investment than Healthpeak Properties. However, Seagate Technology is 1.3 times more volatile than Healthpeak Properties. It trades about -0.06 of its potential returns per unit of risk. Healthpeak Properties is currently generating about -0.11 per unit of risk. If you would invest  57,034  in Seagate Technology Holdings on October 7, 2024 and sell it today you would lose (2,819) from holding Seagate Technology Holdings or give up 4.94% of portfolio value over 90 days.

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

Seagate Technology Holdings  vs.  Healthpeak Properties

Seagate Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seagate Technology Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Seagate Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Healthpeak Properties

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Healthpeak Properties are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Healthpeak Properties is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Seagate Technology and Healthpeak Properties

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

The idea behind Seagate Technology Holdings and Healthpeak 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.