Correlation Between Essential Properties and SL Green
Can any of the company-specific risk be diversified away by investing in both Essential Properties 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 Essential Properties and SL Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Essential Properties Realty and SL Green Realty, you can compare the effects of market volatilities on Essential Properties 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 Essential Properties with a short position of SL Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Essential Properties and SL Green.
Diversification Opportunities for Essential Properties and SL Green
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Essential and SLG is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Essential Properties Realty 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 Essential 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 Essential Properties Realty 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 Essential Properties i.e., Essential Properties and SL Green go up and down completely randomly.
Pair Corralation between Essential Properties and SL Green
Given the investment horizon of 90 days Essential Properties Realty is expected to generate 0.74 times more return on investment than SL Green. However, Essential Properties Realty is 1.35 times less risky than SL Green. It trades about 0.06 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 3,123 in Essential Properties Realty on October 21, 2024 and sell it today you would earn a total of 47.00 from holding Essential Properties Realty or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Essential Properties Realty vs. SL Green Realty
Performance |
| Timeline |
| Essential Properties |
| SL Green Realty |
Essential Properties and SL Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Essential Properties and SL Green
The main advantage of trading using opposite Essential Properties and SL Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Essential Properties 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.| Essential Properties vs. Armada Hflr Pr | Essential Properties vs. CTO Realty Growth | Essential Properties vs. Brightspire Capital | Essential Properties vs. Broadstone Net Lease |
| 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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