Correlation Between Empire State and SHF Holdings
Can any of the company-specific risk be diversified away by investing in both Empire State and SHF 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 SHF 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 SHF Holdings, you can compare the effects of market volatilities on Empire State and SHF 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 SHF Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and SHF Holdings.
Diversification Opportunities for Empire State and SHF Holdings
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Empire and SHF is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and SHF Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHF Holdings 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 SHF Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHF Holdings has no effect on the direction of Empire State i.e., Empire State and SHF Holdings go up and down completely randomly.
Pair Corralation between Empire State and SHF Holdings
Given the investment horizon of 90 days Empire State Realty is expected to under-perform the SHF Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Empire State Realty is 5.41 times less risky than SHF Holdings. The stock trades about -0.23 of its potential returns per unit of risk. The SHF Holdings is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 2.50 in SHF Holdings on January 9, 2025 and sell it today you would lose (0.53) from holding SHF Holdings or give up 21.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 73.91% |
| Values | Daily Returns |
Empire State Realty vs. SHF Holdings
Performance |
| Timeline |
| Empire State Realty |
| SHF Holdings |
Empire State and SHF Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and SHF Holdings
The main advantage of trading using opposite Empire State and SHF Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, SHF 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 SHF Holdings will offset losses from the drop in SHF Holdings' long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| SHF Holdings vs. Camden National | SHF Holdings vs. Bank of Marin | SHF Holdings vs. Arrow Financial | SHF Holdings vs. Auburn National Bancorporation |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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