Correlation Between Diageo PLC and SL Green
Can any of the company-specific risk be diversified away by investing in both Diageo PLC 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 Diageo PLC and SL Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diageo PLC ADR and SL Green Realty, you can compare the effects of market volatilities on Diageo PLC 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 Diageo PLC with a short position of SL Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diageo PLC and SL Green.
Diversification Opportunities for Diageo PLC and SL Green
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Diageo and SLG is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Diageo PLC ADR 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 Diageo PLC 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 Diageo PLC ADR 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 Diageo PLC i.e., Diageo PLC and SL Green go up and down completely randomly.
Pair Corralation between Diageo PLC and SL Green
Considering the 90-day investment horizon Diageo PLC ADR is expected to under-perform the SL Green. But the stock apears to be less risky and, when comparing its historical volatility, Diageo PLC ADR is 2.43 times less risky than SL Green. The stock trades about -0.04 of its potential returns per unit of risk. The SL Green Realty is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,874 in SL Green Realty on September 12, 2024 and sell it today you would earn a total of 4,541 from holding SL Green Realty or generate 158.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diageo PLC ADR vs. SL Green Realty
Performance |
| Timeline |
| Diageo PLC ADR |
| SL Green Realty |
Diageo PLC and SL Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diageo PLC and SL Green
The main advantage of trading using opposite Diageo PLC and SL Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diageo PLC 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.| Diageo PLC vs. Andrew Peller Limited | Diageo PLC vs. Naked Wines plc | Diageo PLC vs. Willamette Valley Vineyards | Diageo PLC vs. Splash Beverage Group |
| SL Green vs. Boston Properties | SL Green vs. Douglas Emmett | SL Green vs. Kilroy Realty Corp | SL Green vs. Alexandria Real Estate |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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