Correlation Between Empire State and New Alternatives
Can any of the company-specific risk be diversified away by investing in both Empire State and New Alternatives 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 New Alternatives 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 New Alternatives Fund, you can compare the effects of market volatilities on Empire State and New Alternatives 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 New Alternatives. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and New Alternatives.
Diversification Opportunities for Empire State and New Alternatives
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Empire and New is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and New Alternatives Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Alternatives 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 New Alternatives. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Alternatives has no effect on the direction of Empire State i.e., Empire State and New Alternatives go up and down completely randomly.
Pair Corralation between Empire State and New Alternatives
Given the investment horizon of 90 days Empire State Realty is expected to generate 1.42 times more return on investment than New Alternatives. However, Empire State is 1.42 times more volatile than New Alternatives Fund. It trades about 0.09 of its potential returns per unit of risk. New Alternatives Fund is currently generating about -0.01 per unit of risk. If you would invest 946.00 in Empire State Realty on August 29, 2024 and sell it today you would earn a total of 162.00 from holding Empire State Realty or generate 17.12% 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. New Alternatives Fund
Performance |
| Timeline |
| Empire State Realty |
| New Alternatives |
Empire State and New Alternatives Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and New Alternatives
The main advantage of trading using opposite Empire State and New Alternatives positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, New Alternatives 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 New Alternatives will offset losses from the drop in New Alternatives' long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| New Alternatives vs. Guinness Atkinson Alternative | New Alternatives vs. Calvert Global Energy | New Alternatives vs. Portfolio 21 Global | New Alternatives vs. Green Century Balanced |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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