Correlation Between Hudson Pacific and American Assets

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

Diversification Opportunities for Hudson Pacific and American Assets

0.86

Correlation Coefficient

Hudson Pacific  American Assets

Very poor diversification

The 3 months correlation between Hudson and American is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Pacific Properties and American Assets Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Assets 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 American Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Assets Trust has no effect on the direction of Hudson Pacific i.e., Hudson Pacific and American Assets go up and down completely randomly.

Pair Corralation between Hudson Pacific and American Assets

Considering the 90-day investment horizon Hudson Pacific Properties is expected to under-perform the American Assets. In addition to that, Hudson Pacific is 1.93 times more volatile than American Assets Trust. It trades about -0.04 of its total potential returns per unit of risk. American Assets Trust is currently generating about -0.02 per unit of volatility. If you would invest  2,966  in American Assets Trust on January 29, 2024 and sell it today you would lose (843.00) from holding American Assets Trust or give up 28.42% of portfolio value over 90 days.

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

Hudson Pacific Properties  vs.  American Assets Trust

Hudson Pacific Properties

Risk-Adjusted Performance

0 of 100

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 May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

American Assets Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Assets Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Hudson Pacific and American Assets

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

The idea behind Hudson Pacific Properties and American Assets 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.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.