Correlation Between Empire State and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Empire State and Sterling Capital 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 Sterling Capital 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 Sterling Capital Mid, you can compare the effects of market volatilities on Empire State and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Sterling Capital.
Diversification Opportunities for Empire State and Sterling Capital
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Empire and Sterling is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Sterling Capital Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Mid 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Mid has no effect on the direction of Empire State i.e., Empire State and Sterling Capital go up and down completely randomly.
Pair Corralation between Empire State and Sterling Capital
Given the investment horizon of 90 days Empire State Realty is expected to generate 1.55 times more return on investment than Sterling Capital. However, Empire State is 1.55 times more volatile than Sterling Capital Mid. It trades about 0.09 of its potential returns per unit of risk. Sterling Capital Mid is currently generating about 0.09 per unit of risk. If you would invest 945.00 in Empire State Realty on September 1, 2024 and sell it today you would earn a total of 151.00 from holding Empire State Realty or generate 15.98% 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. Sterling Capital Mid
Performance |
| Timeline |
| Empire State Realty |
| Sterling Capital Mid |
Empire State and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Sterling Capital
The main advantage of trading using opposite Empire State and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Sterling Capital vs. Sterling Capital Equity | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral | Sterling Capital vs. Sterling Capital Behavioral |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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