Correlation Between Empire State and Aena SA
Can any of the company-specific risk be diversified away by investing in both Empire State and Aena SA 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 Aena SA 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 Aena SA, you can compare the effects of market volatilities on Empire State and Aena SA 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 Aena SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Aena SA.
Diversification Opportunities for Empire State and Aena SA
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Empire and Aena is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Aena SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aena SA 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 Aena SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aena SA has no effect on the direction of Empire State i.e., Empire State and Aena SA go up and down completely randomly.
Pair Corralation between Empire State and Aena SA
Given the investment horizon of 90 days Empire State Realty is expected to under-perform the Aena SA. In addition to that, Empire State is 1.47 times more volatile than Aena SA. It trades about -0.31 of its total potential returns per unit of risk. Aena SA is currently generating about 0.23 per unit of volatility. If you would invest 20,240 in Aena SA on November 27, 2024 and sell it today you would earn a total of 1,060 from holding Aena SA or generate 5.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Empire State Realty vs. Aena SA
Performance |
| Timeline |
| Empire State Realty |
| Aena SA |
Empire State and Aena SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Aena SA
The main advantage of trading using opposite Empire State and Aena SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Aena SA 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 Aena SA will offset losses from the drop in Aena SA's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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