Correlation Between Empire State and Northeast Bancorp
Can any of the company-specific risk be diversified away by investing in both Empire State and Northeast Bancorp 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 Northeast Bancorp 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 Northeast Bancorp, you can compare the effects of market volatilities on Empire State and Northeast Bancorp 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 Northeast Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Northeast Bancorp.
Diversification Opportunities for Empire State and Northeast Bancorp
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Empire and Northeast is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Northeast Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northeast Bancorp 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 Northeast Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northeast Bancorp has no effect on the direction of Empire State i.e., Empire State and Northeast Bancorp go up and down completely randomly.
Pair Corralation between Empire State and Northeast Bancorp
Given the investment horizon of 90 days Empire State is expected to generate 3.17 times less return on investment than Northeast Bancorp. But when comparing it to its historical volatility, Empire State Realty is 2.31 times less risky than Northeast Bancorp. It trades about 0.13 of its potential returns per unit of risk. Northeast Bancorp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 8,885 in Northeast Bancorp on September 1, 2024 and sell it today you would earn a total of 960.00 from holding Northeast Bancorp or generate 10.8% 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. Northeast Bancorp
Performance |
| Timeline |
| Empire State Realty |
| Northeast Bancorp |
Empire State and Northeast Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Northeast Bancorp
The main advantage of trading using opposite Empire State and Northeast Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Northeast Bancorp 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 Northeast Bancorp will offset losses from the drop in Northeast Bancorp's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Northeast Bancorp vs. Home Federal Bancorp | Northeast Bancorp vs. Mainstreet Bank | Northeast Bancorp vs. Investar Holding Corp | Northeast Bancorp vs. Magyar Bancorp |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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