Correlation Between Empire State and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Empire State and Sterling Capital 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 Sterling Capital 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 Sterling Capital Ultra, you can compare the effects of market volatilities on Empire State and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Sterling Capital.
Diversification Opportunities for Empire State and Sterling Capital
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Empire and Sterling is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Sterling Capital Ultra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Ultra 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Ultra has no effect on the direction of Empire State i.e., Empire State and Sterling Capital go up and down completely randomly.
Pair Corralation between Empire State and Sterling Capital
Given the investment horizon of 90 days Empire State Realty is expected to generate 58.67 times more return on investment than Sterling Capital. However, Empire State is 58.67 times more volatile than Sterling Capital Ultra. It trades about 0.13 of its potential returns per unit of risk. Sterling Capital Ultra is currently generating about 0.21 per unit of risk. If you would invest 1,060 in Empire State Realty on September 1, 2024 and sell it today you would earn a total of 36.00 from holding Empire State Realty or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Empire State Realty vs. Sterling Capital Ultra
Performance |
| Timeline |
| Empire State Realty |
| Sterling Capital Ultra |
Empire State and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Sterling Capital
The main advantage of trading using opposite Empire State and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Sterling Capital vs. Sterling Capital Total | Sterling Capital vs. Sterling Capital Total | Sterling Capital vs. Sterling Capital Total | Sterling Capital vs. Sterling Capital Intermediate |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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