Correlation Between Empire State and Guggenheim Alpha
Can any of the company-specific risk be diversified away by investing in both Empire State and Guggenheim Alpha 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 Guggenheim Alpha 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 Guggenheim Alpha Opportunity, you can compare the effects of market volatilities on Empire State and Guggenheim Alpha 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 Guggenheim Alpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Guggenheim Alpha.
Diversification Opportunities for Empire State and Guggenheim Alpha
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Empire and Guggenheim is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Guggenheim Alpha Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Alpha Opp 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 Guggenheim Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Alpha Opp has no effect on the direction of Empire State i.e., Empire State and Guggenheim Alpha go up and down completely randomly.
Pair Corralation between Empire State and Guggenheim Alpha
Given the investment horizon of 90 days Empire State Realty is expected to generate 2.19 times more return on investment than Guggenheim Alpha. However, Empire State is 2.19 times more volatile than Guggenheim Alpha Opportunity. It trades about 0.17 of its potential returns per unit of risk. Guggenheim Alpha Opportunity is currently generating about 0.19 per unit of risk. If you would invest 1,049 in Empire State Realty on September 2, 2024 and sell it today you would earn a total of 47.00 from holding Empire State Realty or generate 4.48% 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. Guggenheim Alpha Opportunity
Performance |
| Timeline |
| Empire State Realty |
| Guggenheim Alpha Opp |
Empire State and Guggenheim Alpha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Guggenheim Alpha
The main advantage of trading using opposite Empire State and Guggenheim Alpha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Guggenheim Alpha 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 Guggenheim Alpha will offset losses from the drop in Guggenheim Alpha's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Guggenheim Alpha vs. Guggenheim Styleplus | Guggenheim Alpha vs. Guggenheim World Equity | Guggenheim Alpha vs. Guggenheim Investment Grade | Guggenheim Alpha vs. Guggenheim Alpha Opportunity |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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