Correlation Between Empire State and Holcim
Can any of the company-specific risk be diversified away by investing in both Empire State and Holcim 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 Holcim 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 Holcim, you can compare the effects of market volatilities on Empire State and Holcim 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 Holcim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Holcim.
Diversification Opportunities for Empire State and Holcim
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Empire and Holcim is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Holcim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holcim 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 Holcim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holcim has no effect on the direction of Empire State i.e., Empire State and Holcim go up and down completely randomly.
Pair Corralation between Empire State and Holcim
Given the investment horizon of 90 days Empire State is expected to generate 1.29 times less return on investment than Holcim. But when comparing it to its historical volatility, Empire State Realty is 1.22 times less risky than Holcim. It trades about 0.11 of its potential returns per unit of risk. Holcim is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 9,803 in Holcim on August 30, 2024 and sell it today you would earn a total of 357.00 from holding Holcim or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Empire State Realty vs. Holcim
Performance |
| Timeline |
| Empire State Realty |
| Holcim |
Empire State and Holcim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Holcim
The main advantage of trading using opposite Empire State and Holcim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Holcim 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 Holcim will offset losses from the drop in Holcim's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Holcim vs. HeidelbergCement AG ADR | Holcim vs. Anhui Conch Cement | Holcim vs. Buzzi Unicem SpA | Holcim vs. Wienerberger Baustoffindustrie |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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