Correlation Between Empire State and Brandes International
Can any of the company-specific risk be diversified away by investing in both Empire State and Brandes International 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 Brandes International 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 Brandes International Small, you can compare the effects of market volatilities on Empire State and Brandes International 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 Brandes International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Brandes International.
Diversification Opportunities for Empire State and Brandes International
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Empire and Brandes is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Brandes International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes International 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 Brandes International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes International has no effect on the direction of Empire State i.e., Empire State and Brandes International go up and down completely randomly.
Pair Corralation between Empire State and Brandes International
Given the investment horizon of 90 days Empire State Realty is expected to under-perform the Brandes International. In addition to that, Empire State is 2.19 times more volatile than Brandes International Small. It trades about -0.02 of its total potential returns per unit of risk. Brandes International Small is currently generating about 0.08 per unit of volatility. If you would invest 1,807 in Brandes International Small on November 28, 2024 and sell it today you would earn a total of 203.00 from holding Brandes International Small or generate 11.23% 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. Brandes International Small
Performance |
| Timeline |
| Empire State Realty |
| Brandes International |
Empire State and Brandes International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Brandes International
The main advantage of trading using opposite Empire State and Brandes International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Brandes International 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 Brandes International will offset losses from the drop in Brandes International's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Brandes International vs. Profunds Large Cap Growth | Brandes International vs. Legg Mason Partners | Brandes International vs. Tiaa Cref Large Cap Growth | Brandes International vs. Fisher Large Cap |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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