Correlation Between Empire State and Finlay Minerals
Can any of the company-specific risk be diversified away by investing in both Empire State and Finlay Minerals 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 Finlay Minerals 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 Finlay Minerals, you can compare the effects of market volatilities on Empire State and Finlay Minerals 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 Finlay Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Finlay Minerals.
Diversification Opportunities for Empire State and Finlay Minerals
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Empire and Finlay is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Finlay Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finlay Minerals 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 Finlay Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finlay Minerals has no effect on the direction of Empire State i.e., Empire State and Finlay Minerals go up and down completely randomly.
Pair Corralation between Empire State and Finlay Minerals
Given the investment horizon of 90 days Empire State is expected to generate 6.54 times less return on investment than Finlay Minerals. But when comparing it to its historical volatility, Empire State Realty is 7.55 times less risky than Finlay Minerals. It trades about 0.06 of its potential returns per unit of risk. Finlay Minerals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4.00 in Finlay Minerals on September 1, 2024 and sell it today you would lose (1.00) from holding Finlay Minerals or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Empire State Realty vs. Finlay Minerals
Performance |
| Timeline |
| Empire State Realty |
| Finlay Minerals |
Empire State and Finlay Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Finlay Minerals
The main advantage of trading using opposite Empire State and Finlay Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Finlay Minerals 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 Finlay Minerals will offset losses from the drop in Finlay Minerals' long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Finlay Minerals vs. CMC Metals | Finlay Minerals vs. Tarku Resources | Finlay Minerals vs. Highway 50 Gold |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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