Correlation Between Empire State and River Financial
Can any of the company-specific risk be diversified away by investing in both Empire State and River Financial 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 River Financial 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 River Financial, you can compare the effects of market volatilities on Empire State and River Financial 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 River Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and River Financial.
Diversification Opportunities for Empire State and River Financial
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Empire and River is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and River Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on River Financial 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 River Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of River Financial has no effect on the direction of Empire State i.e., Empire State and River Financial go up and down completely randomly.
Pair Corralation between Empire State and River Financial
Given the investment horizon of 90 days Empire State Realty is expected to generate 175.69 times more return on investment than River Financial. However, Empire State is 175.69 times more volatile than River Financial. It trades about 0.11 of its potential returns per unit of risk. River Financial is currently generating about 0.21 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 Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Empire State Realty vs. River Financial
Performance |
| Timeline |
| Empire State Realty |
| River Financial |
Empire State and River Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and River Financial
The main advantage of trading using opposite Empire State and River Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, River Financial 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 River Financial will offset losses from the drop in River Financial's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| River Financial vs. Potomac Bancshares | River Financial vs. Mountain Pacific Bancorp | River Financial vs. Pacific Premier Bancorp | River Financial vs. Old National Bancorp |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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