Correlation Between Creative Media and Hudson Pacific

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

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

Diversification Opportunities for Creative Media and Hudson Pacific

-0.74

Correlation Coefficient

Creative Media  Hudson Pacific

Pay attention - limited upside

The 3 months correlation between Creative and Hudson is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Creative Media Community and Hudson Pacific Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Pacific Properties and Creative Media 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 Creative Media Community are associated (or correlated) with Hudson Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudson Pacific Properties has no effect on the direction of Creative Media i.e., Creative Media and Hudson Pacific go up and down completely randomly.

Pair Corralation between Creative Media and Hudson Pacific

Given the investment horizon of 90 days Creative Media Community is expected to under-perform the Hudson Pacific. In addition to that, Creative Media is 5.21 times more volatile than Hudson Pacific Properties. It trades about -0.22 of its total potential returns per unit of risk. Hudson Pacific Properties is currently generating about 0.1 per unit of volatility. If you would invest  1,266  in Hudson Pacific Properties on September 4, 2024 and sell it today you would earn a total of  152.00  from holding Hudson Pacific Properties or generate 12.01% return on investment over 90 days.

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

Creative Media Community  vs.  Hudson Pacific Properties

Creative Media Community

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Creative Media Community has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Hudson Pacific Properties

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hudson Pacific Properties are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Hudson Pacific may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Creative Media and Hudson Pacific

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

The idea behind Creative Media Community and Hudson Pacific 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.

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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.