Correlation Between Empire State and Matthews Pacific
Can any of the company-specific risk be diversified away by investing in both Empire State and Matthews Pacific 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 Matthews Pacific 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 Matthews Pacific Tiger, you can compare the effects of market volatilities on Empire State and Matthews Pacific 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 Matthews Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Matthews Pacific.
Diversification Opportunities for Empire State and Matthews Pacific
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Empire and Matthews is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Matthews Pacific Tiger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews Pacific Tiger 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 Matthews Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews Pacific Tiger has no effect on the direction of Empire State i.e., Empire State and Matthews Pacific go up and down completely randomly.
Pair Corralation between Empire State and Matthews Pacific
Given the investment horizon of 90 days Empire State Realty is expected to generate 1.28 times more return on investment than Matthews Pacific. However, Empire State is 1.28 times more volatile than Matthews Pacific Tiger. It trades about 0.09 of its potential returns per unit of risk. Matthews Pacific Tiger is currently generating about 0.02 per unit of risk. If you would invest 945.00 in Empire State Realty on September 1, 2024 and sell it today you would earn a total of 151.00 from holding Empire State Realty or generate 15.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Empire State Realty vs. Matthews Pacific Tiger
Performance |
| Timeline |
| Empire State Realty |
| Matthews Pacific Tiger |
Empire State and Matthews Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Matthews Pacific
The main advantage of trading using opposite Empire State and Matthews Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Matthews Pacific 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 Matthews Pacific will offset losses from the drop in Matthews Pacific's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Matthews Pacific vs. Matthews Asia Growth | Matthews Pacific vs. Matthews Japan Fund | Matthews Pacific vs. Matthews China Fund |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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