Correlation Between Empire State and First Investors
Can any of the company-specific risk be diversified away by investing in both Empire State and First Investors 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 First Investors 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 First Investors Select, you can compare the effects of market volatilities on Empire State and First Investors 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 First Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and First Investors.
Diversification Opportunities for Empire State and First Investors
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Empire and First is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and First Investors Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Select 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 First Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Investors Select has no effect on the direction of Empire State i.e., Empire State and First Investors go up and down completely randomly.
Pair Corralation between Empire State and First Investors
Given the investment horizon of 90 days Empire State is expected to generate 1.08 times less return on investment than First Investors. In addition to that, Empire State is 1.78 times more volatile than First Investors Select. It trades about 0.05 of its total potential returns per unit of risk. First Investors Select is currently generating about 0.1 per unit of volatility. If you would invest 1,169 in First Investors Select on September 1, 2024 and sell it today you would earn a total of 209.00 from holding First Investors Select or generate 17.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire State Realty vs. First Investors Select
Performance |
| Timeline |
| Empire State Realty |
| First Investors Select |
Empire State and First Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and First Investors
The main advantage of trading using opposite Empire State and First Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, First Investors 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 First Investors will offset losses from the drop in First Investors' long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| First Investors vs. Old Westbury Large | First Investors vs. Qs Large Cap | First Investors vs. Morningstar Unconstrained Allocation | First Investors vs. Principal Lifetime Hybrid |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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