Correlation Between Empire State and Marine Products
Can any of the company-specific risk be diversified away by investing in both Empire State and Marine Products 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 Marine Products 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 Marine Products, you can compare the effects of market volatilities on Empire State and Marine Products 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 Marine Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Marine Products.
Diversification Opportunities for Empire State and Marine Products
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Empire and Marine is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Marine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Products 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 Marine Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Products has no effect on the direction of Empire State i.e., Empire State and Marine Products go up and down completely randomly.
Pair Corralation between Empire State and Marine Products
Given the investment horizon of 90 days Empire State is expected to generate 1.75 times less return on investment than Marine Products. But when comparing it to its historical volatility, Empire State Realty is 1.37 times less risky than Marine Products. It trades about 0.1 of its potential returns per unit of risk. Marine Products is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 940.00 in Marine Products on August 31, 2024 and sell it today you would earn a total of 46.00 from holding Marine Products or generate 4.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire State Realty vs. Marine Products
Performance |
| Timeline |
| Empire State Realty |
| Marine Products |
Empire State and Marine Products Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Marine Products
The main advantage of trading using opposite Empire State and Marine Products positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Marine Products 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 Marine Products will offset losses from the drop in Marine Products' long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Marine Products vs. Vision Marine Technologies | Marine Products vs. EZGO Technologies | Marine Products vs. LCI Industries | Marine Products vs. Curtiss Motorcycles |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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