Correlation Between Empire State and Nedbank
Can any of the company-specific risk be diversified away by investing in both Empire State and Nedbank 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 Nedbank 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 Nedbank Group, you can compare the effects of market volatilities on Empire State and Nedbank 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 Nedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Nedbank.
Diversification Opportunities for Empire State and Nedbank
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Empire and Nedbank is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Nedbank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nedbank Group 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 Nedbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nedbank Group has no effect on the direction of Empire State i.e., Empire State and Nedbank go up and down completely randomly.
Pair Corralation between Empire State and Nedbank
Given the investment horizon of 90 days Empire State Realty is expected to generate 1.19 times more return on investment than Nedbank. However, Empire State is 1.19 times more volatile than Nedbank Group. It trades about 0.11 of its potential returns per unit of risk. Nedbank Group is currently generating about -0.09 per unit of risk. If you would invest 1,076 in Empire State Realty on August 30, 2024 and sell it today you would earn a total of 32.00 from holding Empire State Realty or generate 2.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire State Realty vs. Nedbank Group
Performance |
| Timeline |
| Empire State Realty |
| Nedbank Group |
Empire State and Nedbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Nedbank
The main advantage of trading using opposite Empire State and Nedbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Nedbank 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 Nedbank will offset losses from the drop in Nedbank's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Nedbank vs. Zeder Investments | Nedbank vs. HomeChoice Investments | Nedbank vs. Hosken Consolidated Investments | Nedbank vs. ABSA Bank Limited |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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