Correlation Between Empire State and LumenRadio
Can any of the company-specific risk be diversified away by investing in both Empire State and LumenRadio 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 LumenRadio 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 LumenRadio AB, you can compare the effects of market volatilities on Empire State and LumenRadio 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 LumenRadio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and LumenRadio.
Diversification Opportunities for Empire State and LumenRadio
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Empire and LumenRadio is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and LumenRadio AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LumenRadio AB 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 LumenRadio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LumenRadio AB has no effect on the direction of Empire State i.e., Empire State and LumenRadio go up and down completely randomly.
Pair Corralation between Empire State and LumenRadio
Given the investment horizon of 90 days Empire State is expected to generate 1.13 times less return on investment than LumenRadio. But when comparing it to its historical volatility, Empire State Realty is 1.3 times less risky than LumenRadio. It trades about 0.06 of its potential returns per unit of risk. LumenRadio AB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,050 in LumenRadio AB on August 30, 2024 and sell it today you would earn a total of 4,150 from holding LumenRadio AB or generate 68.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Empire State Realty vs. LumenRadio AB
Performance |
| Timeline |
| Empire State Realty |
| LumenRadio AB |
Empire State and LumenRadio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and LumenRadio
The main advantage of trading using opposite Empire State and LumenRadio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, LumenRadio 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 LumenRadio will offset losses from the drop in LumenRadio's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| LumenRadio vs. Train Alliance Sweden | LumenRadio vs. White Pearl Technology | LumenRadio vs. Investment AB Oresund | LumenRadio vs. Soder Sportfiske AB |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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