Correlation Between Broadstone Net and SL Green
Can any of the company-specific risk be diversified away by investing in both Broadstone Net and SL Green 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 Broadstone Net and SL Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Broadstone Net Lease and SL Green Realty, you can compare the effects of market volatilities on Broadstone Net and SL Green 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 Broadstone Net with a short position of SL Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadstone Net and SL Green.
Diversification Opportunities for Broadstone Net and SL Green
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Broadstone and SLG is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Broadstone Net Lease and SL Green Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SL Green Realty and Broadstone Net 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 Broadstone Net Lease are associated (or correlated) with SL Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SL Green Realty has no effect on the direction of Broadstone Net i.e., Broadstone Net and SL Green go up and down completely randomly.
Pair Corralation between Broadstone Net and SL Green
Considering the 90-day investment horizon Broadstone Net Lease is expected to generate 0.36 times more return on investment than SL Green. However, Broadstone Net Lease is 2.8 times less risky than SL Green. It trades about -0.14 of its potential returns per unit of risk. SL Green Realty is currently generating about -0.07 per unit of risk. If you would invest 1,707 in Broadstone Net Lease on September 18, 2024 and sell it today you would lose (30.00) from holding Broadstone Net Lease or give up 1.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Broadstone Net Lease vs. SL Green Realty
Performance |
| Timeline |
| Broadstone Net Lease |
| SL Green Realty |
Broadstone Net and SL Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Broadstone Net and SL Green
The main advantage of trading using opposite Broadstone Net and SL Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadstone Net position performs unexpectedly, SL Green 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 SL Green will offset losses from the drop in SL Green's long position.The idea behind Broadstone Net Lease and SL Green Realty 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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