Correlation Between Empire State and Mfs Lifetime
Can any of the company-specific risk be diversified away by investing in both Empire State and Mfs Lifetime 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 Mfs Lifetime 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 Mfs Lifetime 2065, you can compare the effects of market volatilities on Empire State and Mfs Lifetime 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 Mfs Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Mfs Lifetime.
Diversification Opportunities for Empire State and Mfs Lifetime
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Empire and Mfs is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Mfs Lifetime 2065 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mfs Lifetime 2065 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 Mfs Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mfs Lifetime 2065 has no effect on the direction of Empire State i.e., Empire State and Mfs Lifetime go up and down completely randomly.
Pair Corralation between Empire State and Mfs Lifetime
Given the investment horizon of 90 days Empire State Realty is expected to generate 2.07 times more return on investment than Mfs Lifetime. However, Empire State is 2.07 times more volatile than Mfs Lifetime 2065. It trades about 0.09 of its potential returns per unit of risk. Mfs Lifetime 2065 is currently generating about 0.14 per unit of risk. If you would invest 1,082 in Empire State Realty on August 29, 2024 and sell it today you would earn a total of 26.00 from holding Empire State Realty or generate 2.4% 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. Mfs Lifetime 2065
Performance |
| Timeline |
| Empire State Realty |
| Mfs Lifetime 2065 |
Empire State and Mfs Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Mfs Lifetime
The main advantage of trading using opposite Empire State and Mfs Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Mfs Lifetime 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 Mfs Lifetime will offset losses from the drop in Mfs Lifetime'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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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