Correlation Between Empire State and REDFLEX HOLDINGS
Can any of the company-specific risk be diversified away by investing in both Empire State and REDFLEX HOLDINGS 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 REDFLEX HOLDINGS 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 REDFLEX HOLDINGS LTD, you can compare the effects of market volatilities on Empire State and REDFLEX HOLDINGS 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 REDFLEX HOLDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and REDFLEX HOLDINGS.
Diversification Opportunities for Empire State and REDFLEX HOLDINGS
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Empire and REDFLEX is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and REDFLEX HOLDINGS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REDFLEX HOLDINGS LTD 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 REDFLEX HOLDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REDFLEX HOLDINGS LTD has no effect on the direction of Empire State i.e., Empire State and REDFLEX HOLDINGS go up and down completely randomly.
Pair Corralation between Empire State and REDFLEX HOLDINGS
Given the investment horizon of 90 days Empire State is expected to generate 8.25 times less return on investment than REDFLEX HOLDINGS. But when comparing it to its historical volatility, Empire State Realty is 10.05 times less risky than REDFLEX HOLDINGS. It trades about 0.06 of its potential returns per unit of risk. REDFLEX HOLDINGS LTD is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 14.00 in REDFLEX HOLDINGS LTD on September 1, 2024 and sell it today you would lose (11.21) from holding REDFLEX HOLDINGS LTD or give up 80.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire State Realty vs. REDFLEX HOLDINGS LTD
Performance |
| Timeline |
| Empire State Realty |
| REDFLEX HOLDINGS LTD |
Empire State and REDFLEX HOLDINGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and REDFLEX HOLDINGS
The main advantage of trading using opposite Empire State and REDFLEX HOLDINGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, REDFLEX HOLDINGS 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 REDFLEX HOLDINGS will offset losses from the drop in REDFLEX HOLDINGS's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| REDFLEX HOLDINGS vs. ATT Inc | REDFLEX HOLDINGS vs. Merck Company | REDFLEX HOLDINGS vs. Walt Disney | REDFLEX HOLDINGS vs. Caterpillar |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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