Correlation Between Empire State and Growth Portfolio
Can any of the company-specific risk be diversified away by investing in both Empire State and Growth Portfolio 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 Growth Portfolio 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 Growth Portfolio Class, you can compare the effects of market volatilities on Empire State and Growth Portfolio 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 Growth Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Growth Portfolio.
Diversification Opportunities for Empire State and Growth Portfolio
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Empire and Growth is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Growth Portfolio Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growth Portfolio Class 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 Growth Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growth Portfolio Class has no effect on the direction of Empire State i.e., Empire State and Growth Portfolio go up and down completely randomly.
Pair Corralation between Empire State and Growth Portfolio
Given the investment horizon of 90 days Empire State is expected to generate 96.01 times less return on investment than Growth Portfolio. But when comparing it to its historical volatility, Empire State Realty is 1.51 times less risky than Growth Portfolio. It trades about 0.01 of its potential returns per unit of risk. Growth Portfolio Class is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 3,936 in Growth Portfolio Class on August 30, 2024 and sell it today you would earn a total of 1,258 from holding Growth Portfolio Class or generate 31.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire State Realty vs. Growth Portfolio Class
Performance |
| Timeline |
| Empire State Realty |
| Growth Portfolio Class |
Empire State and Growth Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Growth Portfolio
The main advantage of trading using opposite Empire State and Growth Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Growth Portfolio 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 Growth Portfolio will offset losses from the drop in Growth Portfolio's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Growth Portfolio vs. Growth Fund Of | Growth Portfolio vs. HUMANA INC | Growth Portfolio vs. Aquagold International | Growth Portfolio vs. Barloworld Ltd ADR |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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