Correlation Between Empire State and Kopernik Global
Can any of the company-specific risk be diversified away by investing in both Empire State and Kopernik Global 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 Kopernik Global 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 Kopernik Global All Cap, you can compare the effects of market volatilities on Empire State and Kopernik Global 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 Kopernik Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Kopernik Global.
Diversification Opportunities for Empire State and Kopernik Global
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Empire and Kopernik is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Kopernik Global All Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kopernik Global All 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 Kopernik Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kopernik Global All has no effect on the direction of Empire State i.e., Empire State and Kopernik Global go up and down completely randomly.
Pair Corralation between Empire State and Kopernik Global
Given the investment horizon of 90 days Empire State Realty is expected to generate 2.72 times more return on investment than Kopernik Global. However, Empire State is 2.72 times more volatile than Kopernik Global All Cap. It trades about 0.08 of its potential returns per unit of risk. Kopernik Global All Cap is currently generating about 0.04 per unit of risk. If you would invest 686.00 in Empire State Realty on September 2, 2024 and sell it today you would earn a total of 410.00 from holding Empire State Realty or generate 59.77% 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. Kopernik Global All Cap
Performance |
| Timeline |
| Empire State Realty |
| Kopernik Global All |
Empire State and Kopernik Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Kopernik Global
The main advantage of trading using opposite Empire State and Kopernik Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Kopernik Global 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 Kopernik Global will offset losses from the drop in Kopernik Global's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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