Correlation Between Empire State and Presidio Property
Can any of the company-specific risk be diversified away by investing in both Empire State and Presidio Property 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 Presidio Property 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 Presidio Property Trust, you can compare the effects of market volatilities on Empire State and Presidio Property 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 Presidio Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Presidio Property.
Diversification Opportunities for Empire State and Presidio Property
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Empire and Presidio is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Presidio Property Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Presidio Property Trust 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 Presidio Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Presidio Property Trust has no effect on the direction of Empire State i.e., Empire State and Presidio Property go up and down completely randomly.
Pair Corralation between Empire State and Presidio Property
Given the investment horizon of 90 days Empire State is expected to generate 2.3 times less return on investment than Presidio Property. But when comparing it to its historical volatility, Empire State Realty is 3.45 times less risky than Presidio Property. It trades about 0.06 of its potential returns per unit of risk. Presidio Property Trust is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 58.00 in Presidio Property Trust on September 1, 2024 and sell it today you would earn a total of 12.00 from holding Presidio Property Trust or generate 20.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire State Realty vs. Presidio Property Trust
Performance |
| Timeline |
| Empire State Realty |
| Presidio Property Trust |
Empire State and Presidio Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Presidio Property
The main advantage of trading using opposite Empire State and Presidio Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Presidio Property 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 Presidio Property will offset losses from the drop in Presidio Property's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| Presidio Property vs. Investcorp Credit Management | Presidio Property vs. Medalist Diversified Reit | Presidio Property vs. Mingzhu Logistics Holdings |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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