Correlation Between Cousins Properties and Empire State
Can any of the company-specific risk be diversified away by investing in both Cousins Properties and Empire State 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 Cousins Properties and Empire State into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cousins Properties Incorporated and Empire State Realty, you can compare the effects of market volatilities on Cousins Properties and Empire State 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 Cousins Properties with a short position of Empire State. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cousins Properties and Empire State.
Diversification Opportunities for Cousins Properties and Empire State
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cousins and Empire is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cousins Properties Incorporate and Empire State Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire State Realty and Cousins 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 Cousins Properties Incorporated are associated (or correlated) with Empire State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire State Realty has no effect on the direction of Cousins Properties i.e., Cousins Properties and Empire State go up and down completely randomly.
Pair Corralation between Cousins Properties and Empire State
Considering the 90-day investment horizon Cousins Properties Incorporated is expected to generate 0.82 times more return on investment than Empire State. However, Cousins Properties Incorporated is 1.22 times less risky than Empire State. It trades about 0.1 of its potential returns per unit of risk. Empire State Realty is currently generating about 0.04 per unit of risk. If you would invest 3,114 in Cousins Properties Incorporated on August 28, 2024 and sell it today you would earn a total of 76.00 from holding Cousins Properties Incorporated or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cousins Properties Incorporate vs. Empire State Realty
Performance |
| Timeline |
| Cousins Properties |
| Empire State Realty |
Cousins Properties and Empire State Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cousins Properties and Empire State
The main advantage of trading using opposite Cousins Properties and Empire State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cousins Properties position performs unexpectedly, Empire State 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 Empire State will offset losses from the drop in Empire State's long position.| Cousins Properties vs. Highwoods Properties | Cousins Properties vs. Douglas Emmett | Cousins Properties vs. Equity Commonwealth | Cousins Properties vs. Kilroy Realty Corp |
| Empire State vs. Empire State Realty | Empire State vs. Cousins Properties Incorporated | Empire State vs. Brandywine Realty Trust | Empire State vs. Piedmont Office Realty |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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