Correlation Between Empire State and Solstice Gold
Can any of the company-specific risk be diversified away by investing in both Empire State and Solstice Gold 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 Solstice Gold 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 Solstice Gold Corp, you can compare the effects of market volatilities on Empire State and Solstice Gold 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 Solstice Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Solstice Gold.
Diversification Opportunities for Empire State and Solstice Gold
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Empire and Solstice is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Solstice Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstice Gold 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 Solstice Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstice Gold Corp has no effect on the direction of Empire State i.e., Empire State and Solstice Gold go up and down completely randomly.
Pair Corralation between Empire State and Solstice Gold
Given the investment horizon of 90 days Empire State is expected to generate 17.98 times less return on investment than Solstice Gold. But when comparing it to its historical volatility, Empire State Realty is 12.65 times less risky than Solstice Gold. It trades about 0.06 of its potential returns per unit of risk. Solstice Gold Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5.00 in Solstice Gold Corp on August 29, 2024 and sell it today you would lose (3.11) from holding Solstice Gold Corp or give up 62.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire State Realty vs. Solstice Gold Corp
Performance |
| Timeline |
| Empire State Realty |
| Solstice Gold Corp |
Empire State and Solstice Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Solstice Gold
The main advantage of trading using opposite Empire State and Solstice Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Solstice Gold 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 Solstice Gold will offset losses from the drop in Solstice Gold's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Solstice Gold vs. Vertiv Holdings Co | Solstice Gold vs. Nasdaq Inc | Solstice Gold vs. McDonalds | Solstice Gold vs. Walmart |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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