Correlation Between Healthpeak Properties and Brandywine Realty

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

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

Diversification Opportunities for Healthpeak Properties and Brandywine Realty

0.78

Correlation Coefficient

Healthpeak Properties  Brandywine Realty

Poor diversification

The 3 months correlation between Healthpeak and Brandywine is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Healthpeak 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 Healthpeak Properties 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 Healthpeak 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 Healthpeak Properties i.e., Healthpeak Properties and Brandywine Realty go up and down completely randomly.

Pair Corralation between Healthpeak Properties and Brandywine Realty

Considering the 90-day investment horizon Healthpeak Properties is expected to generate 0.66 times more return on investment than Brandywine Realty. However, Healthpeak Properties is 1.51 times less risky than Brandywine Realty. It trades about 0.15 of its potential returns per unit of risk. Brandywine Realty Trust is currently generating about 0.04 per unit of risk. If you would invest  1,697  in Healthpeak Properties on March 13, 2024 and sell it today you would earn a total of  226.00  from holding Healthpeak Properties or generate 13.32% return on investment over 90 days.

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

Healthpeak Properties  vs.  Brandywine Realty Trust

Healthpeak Properties

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Healthpeak Properties are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Healthpeak Properties exhibited solid returns over the last few months and may actually be approaching a breakup point.

Brandywine Realty Trust

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Brandywine Realty Trust are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Brandywine Realty is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Healthpeak Properties and Brandywine Realty

The main advantage of trading using opposite Healthpeak Properties and Brandywine Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Healthpeak Properties 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 Healthpeak 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.