Correlation Between Empire State and Ceres Power
Can any of the company-specific risk be diversified away by investing in both Empire State and Ceres 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 Ceres 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 Ceres Power Holdings, you can compare the effects of market volatilities on Empire State and Ceres 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 Ceres Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Ceres Power.
Diversification Opportunities for Empire State and Ceres Power
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Empire and Ceres is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Ceres Power Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ceres Power Holdings 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 Ceres Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ceres Power Holdings has no effect on the direction of Empire State i.e., Empire State and Ceres Power go up and down completely randomly.
Pair Corralation between Empire State and Ceres Power
Given the investment horizon of 90 days Empire State Realty is expected to generate 0.35 times more return on investment than Ceres Power. However, Empire State Realty is 2.84 times less risky than Ceres Power. It trades about 0.09 of its potential returns per unit of risk. Ceres Power Holdings is currently generating about -0.03 per unit of risk. If you would invest 945.00 in Empire State Realty on September 1, 2024 and sell it today you would earn a total of 151.00 from holding Empire State Realty or generate 15.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.92% |
| Values | Daily Returns |
Empire State Realty vs. Ceres Power Holdings
Performance |
| Timeline |
| Empire State Realty |
| Ceres Power Holdings |
Empire State and Ceres Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Ceres Power
The main advantage of trading using opposite Empire State and Ceres Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Ceres 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 Ceres Power will offset losses from the drop in Ceres 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 |
| Ceres Power vs. Datagroup SE | Ceres Power vs. Eastman Chemical Co | Ceres Power vs. Ion Beam Applications | Ceres Power vs. Automatic Data Processing |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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