Correlation Between Highwoods Properties and Federal Home

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

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

Diversification Opportunities for Highwoods Properties and Federal Home

0.55

Correlation Coefficient

Highwoods Properties  Federal Home

Very weak diversification

The 3 months correlation between Highwoods and Federal is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Highwoods Properties and Federal Home Loan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Home Loan and Highwoods 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 Highwoods Properties are associated (or correlated) with Federal Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Home Loan has no effect on the direction of Highwoods Properties i.e., Highwoods Properties and Federal Home go up and down completely randomly.

Pair Corralation between Highwoods Properties and Federal Home

Considering the 90-day investment horizon Highwoods Properties is expected to generate 1304.25 times less return on investment than Federal Home. But when comparing it to its historical volatility, Highwoods Properties is 2.15 times less risky than Federal Home. It trades about 0.0 of its potential returns per unit of risk. Federal Home Loan is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  925.00  in Federal Home Loan on May 7, 2025 and sell it today you would earn a total of  315.00  from holding Federal Home Loan or generate 34.05% return on investment over 90 days.

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

Highwoods Properties  vs.  Federal Home Loan

Highwoods Properties

Risk-Adjusted Performance

Very Weak

Over the last 90 days Highwoods Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Highwoods Properties is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Federal Home Loan

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Federal Home Loan are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward-looking signals, Federal Home displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Highwoods Properties and Federal Home

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

The idea behind Highwoods Properties and Federal Home Loan 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 Transaction History module to view history of all your transactions and understand their impact on performance.