Correlation Between Empire State and Falcon Power
Can any of the company-specific risk be diversified away by investing in both Empire State and Falcon Power 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 Empire State and Falcon Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire State Realty and Falcon Power Co, you can compare the effects of market volatilities on Empire State and Falcon Power 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 Empire State with a short position of Falcon Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Falcon Power.
Diversification Opportunities for Empire State and Falcon Power
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Empire and Falcon is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Falcon Power Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Power and Empire State 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 Empire State Realty are associated (or correlated) with Falcon Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Power has no effect on the direction of Empire State i.e., Empire State and Falcon Power go up and down completely randomly.
Pair Corralation between Empire State and Falcon Power
Given the investment horizon of 90 days Empire State Realty is expected to generate 0.58 times more return on investment than Falcon Power. However, Empire State Realty is 1.71 times less risky than Falcon Power. It trades about 0.05 of its potential returns per unit of risk. Falcon Power Co is currently generating about 0.02 per unit of risk. If you would invest 956.00 in Empire State Realty on September 1, 2024 and sell it today you would earn a total of 140.00 from holding Empire State Realty or generate 14.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire State Realty vs. Falcon Power Co
Performance |
| Timeline |
| Empire State Realty |
| Falcon Power |
Empire State and Falcon Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Falcon Power
The main advantage of trading using opposite Empire State and Falcon Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Falcon Power 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 Falcon Power will offset losses from the drop in Falcon Power's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Falcon Power vs. Lee Chi Enterprises | Falcon Power vs. Fortune Electric Co | Falcon Power vs. Kaulin Mfg | Falcon Power vs. Klingon Aerospace |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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