Correlation Between Empire State and Themac Resources
Can any of the company-specific risk be diversified away by investing in both Empire State and Themac Resources 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 Themac Resources 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 Themac Resources Group, you can compare the effects of market volatilities on Empire State and Themac Resources 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 Themac Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Themac Resources.
Diversification Opportunities for Empire State and Themac Resources
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Empire and Themac is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Themac Resources Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Themac Resources 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 Themac Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Themac Resources has no effect on the direction of Empire State i.e., Empire State and Themac Resources go up and down completely randomly.
Pair Corralation between Empire State and Themac Resources
Given the investment horizon of 90 days Empire State is expected to generate 5.2 times less return on investment than Themac Resources. But when comparing it to its historical volatility, Empire State Realty is 5.72 times less risky than Themac Resources. It trades about 0.05 of its potential returns per unit of risk. Themac Resources Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Themac Resources Group on September 1, 2024 and sell it today you would lose (1.80) from holding Themac Resources Group or give up 30.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire State Realty vs. Themac Resources Group
Performance |
| Timeline |
| Empire State Realty |
| Themac Resources |
Empire State and Themac Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Themac Resources
The main advantage of trading using opposite Empire State and Themac Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Themac Resources 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 Themac Resources will offset losses from the drop in Themac Resources' long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Themac Resources vs. South32 Limited | Themac Resources vs. NioCorp Developments Ltd | Themac Resources vs. HUMANA INC | Themac Resources vs. SCOR PK |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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