Correlation Between Empire State and Plum Acquisition
Can any of the company-specific risk be diversified away by investing in both Empire State and Plum Acquisition 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 Plum Acquisition 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 Plum Acquisition Corp, you can compare the effects of market volatilities on Empire State and Plum Acquisition 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 Plum Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Plum Acquisition.
Diversification Opportunities for Empire State and Plum Acquisition
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Empire and Plum is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Plum Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plum Acquisition Corp 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 Plum Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plum Acquisition Corp has no effect on the direction of Empire State i.e., Empire State and Plum Acquisition go up and down completely randomly.
Pair Corralation between Empire State and Plum Acquisition
Given the investment horizon of 90 days Empire State is expected to generate 138.58 times less return on investment than Plum Acquisition. But when comparing it to its historical volatility, Empire State Realty is 70.06 times less risky than Plum Acquisition. It trades about 0.08 of its potential returns per unit of risk. Plum Acquisition Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 18.00 in Plum Acquisition Corp on September 2, 2024 and sell it today you would earn a total of 7.00 from holding Plum Acquisition Corp or generate 38.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 61.56% |
| Values | Daily Returns |
Empire State Realty vs. Plum Acquisition Corp
Performance |
| Timeline |
| Empire State Realty |
| Plum Acquisition Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Strong
Empire State and Plum Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Plum Acquisition
The main advantage of trading using opposite Empire State and Plum Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Plum Acquisition 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 Plum Acquisition will offset losses from the drop in Plum Acquisition's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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