Correlation Between Empire State and Midnight Sun
Can any of the company-specific risk be diversified away by investing in both Empire State and Midnight Sun 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 Midnight Sun 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 Midnight Sun Mining, you can compare the effects of market volatilities on Empire State and Midnight Sun 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 Midnight Sun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Midnight Sun.
Diversification Opportunities for Empire State and Midnight Sun
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Empire and Midnight is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Midnight Sun Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midnight Sun Mining 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 Midnight Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midnight Sun Mining has no effect on the direction of Empire State i.e., Empire State and Midnight Sun go up and down completely randomly.
Pair Corralation between Empire State and Midnight Sun
Given the investment horizon of 90 days Empire State is expected to generate 2.84 times less return on investment than Midnight Sun. But when comparing it to its historical volatility, Empire State Realty is 3.59 times less risky than Midnight Sun. It trades about 0.08 of its potential returns per unit of risk. Midnight Sun Mining is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 24.00 in Midnight Sun Mining on September 2, 2024 and sell it today you would earn a total of 23.00 from holding Midnight Sun Mining or generate 95.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire State Realty vs. Midnight Sun Mining
Performance |
| Timeline |
| Empire State Realty |
| Midnight Sun Mining |
Empire State and Midnight Sun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Midnight Sun
The main advantage of trading using opposite Empire State and Midnight Sun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Midnight Sun 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 Midnight Sun will offset losses from the drop in Midnight Sun's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Midnight Sun vs. New Destiny Mining | Midnight Sun vs. Magnum Goldcorp | Midnight Sun vs. Asiabasemetals | Midnight Sun vs. Lupaka Gold Corp |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |