Correlation Between Empire State and Pacer Swan
Can any of the company-specific risk be diversified away by investing in both Empire State and Pacer Swan 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 Pacer Swan 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 Pacer Swan SOS, you can compare the effects of market volatilities on Empire State and Pacer Swan 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 Pacer Swan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Pacer Swan.
Diversification Opportunities for Empire State and Pacer Swan
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Empire and Pacer is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Pacer Swan SOS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Swan SOS 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 Pacer Swan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Swan SOS has no effect on the direction of Empire State i.e., Empire State and Pacer Swan go up and down completely randomly.
Pair Corralation between Empire State and Pacer Swan
Given the investment horizon of 90 days Empire State Realty is expected to generate 2.91 times more return on investment than Pacer Swan. However, Empire State is 2.91 times more volatile than Pacer Swan SOS. It trades about 0.09 of its potential returns per unit of risk. Pacer Swan SOS is currently generating about 0.15 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 | 99.21% |
| Values | Daily Returns |
Empire State Realty vs. Pacer Swan SOS
Performance |
| Timeline |
| Empire State Realty |
| Pacer Swan SOS |
Empire State and Pacer Swan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Pacer Swan
The main advantage of trading using opposite Empire State and Pacer Swan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Pacer Swan 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 Pacer Swan will offset losses from the drop in Pacer Swan's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Pacer Swan vs. Innovator ETFs Trust | Pacer Swan vs. First Trust Cboe | Pacer Swan vs. Innovator SP 500 | Pacer Swan vs. Innovator Equity Power |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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