Correlation Between Empire State and Basic Energy
Can any of the company-specific risk be diversified away by investing in both Empire State and Basic Energy 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 Basic Energy 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 Basic Energy Corp, you can compare the effects of market volatilities on Empire State and Basic Energy 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 Basic Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Basic Energy.
Diversification Opportunities for Empire State and Basic Energy
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Empire and Basic is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Basic Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Energy Corp 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 Basic Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Energy Corp has no effect on the direction of Empire State i.e., Empire State and Basic Energy go up and down completely randomly.
Pair Corralation between Empire State and Basic Energy
Given the investment horizon of 90 days Empire State Realty is expected to generate 0.34 times more return on investment than Basic Energy. However, Empire State Realty is 2.97 times less risky than Basic Energy. It trades about 0.11 of its potential returns per unit of risk. Basic Energy Corp is currently generating about -0.07 per unit of risk. If you would invest 1,076 in Empire State Realty on August 30, 2024 and sell it today you would earn a total of 32.00 from holding Empire State Realty or generate 2.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Empire State Realty vs. Basic Energy Corp
Performance |
| Timeline |
| Empire State Realty |
| Basic Energy Corp |
Empire State and Basic Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Basic Energy
The main advantage of trading using opposite Empire State and Basic Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Basic Energy 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 Basic Energy will offset losses from the drop in Basic Energy's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Basic Energy vs. Oriental Petroleum and | Basic Energy vs. GT Capital Holdings | Basic Energy vs. Allhome Corp | Basic Energy vs. Jollibee Foods Corp |
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 Stocks Directory module to find actively traded stocks across global markets.
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