Correlation Between Empire State and Global Hard
Can any of the company-specific risk be diversified away by investing in both Empire State and Global Hard 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 Global Hard 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 Global Hard Assets, you can compare the effects of market volatilities on Empire State and Global Hard 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 Global Hard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Global Hard.
Diversification Opportunities for Empire State and Global Hard
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Empire and Global is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Global Hard Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Hard Assets 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 Global Hard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Hard Assets has no effect on the direction of Empire State i.e., Empire State and Global Hard go up and down completely randomly.
Pair Corralation between Empire State and Global Hard
Given the investment horizon of 90 days Empire State Realty is expected to generate 1.45 times more return on investment than Global Hard. However, Empire State is 1.45 times more volatile than Global Hard Assets. It trades about 0.04 of its potential returns per unit of risk. Global Hard Assets is currently generating about -0.02 per unit of risk. If you would invest 1,108 in Empire State Realty on August 29, 2024 and sell it today you would earn a total of 17.00 from holding Empire State Realty or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire State Realty vs. Global Hard Assets
Performance |
| Timeline |
| Empire State Realty |
| Global Hard Assets |
Empire State and Global Hard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Global Hard
The main advantage of trading using opposite Empire State and Global Hard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Global Hard 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 Global Hard will offset losses from the drop in Global Hard's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Global Hard vs. Small Cap Growth | Global Hard vs. Small Pany Growth | Global Hard vs. Baird Smallmid Cap | Global Hard vs. Fisher Small Cap |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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