Correlation Between Empire State and American Beacon
Can any of the company-specific risk be diversified away by investing in both Empire State and American Beacon 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 American Beacon 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 American Beacon Twentyfour, you can compare the effects of market volatilities on Empire State and American Beacon 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 American Beacon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and American Beacon.
Diversification Opportunities for Empire State and American Beacon
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Empire and American is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and American Beacon Twentyfour in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Beacon Twen 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 American Beacon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Beacon Twen has no effect on the direction of Empire State i.e., Empire State and American Beacon go up and down completely randomly.
Pair Corralation between Empire State and American Beacon
Given the investment horizon of 90 days Empire State Realty is expected to under-perform the American Beacon. In addition to that, Empire State is 24.45 times more volatile than American Beacon Twentyfour. It trades about -0.23 of its total potential returns per unit of risk. American Beacon Twentyfour is currently generating about 0.05 per unit of volatility. If you would invest 864.00 in American Beacon Twentyfour on January 14, 2025 and sell it today you would earn a total of 1.00 from holding American Beacon Twentyfour or generate 0.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Empire State Realty vs. American Beacon Twentyfour
Performance |
| Timeline |
| Empire State Realty |
| American Beacon Twen |
Empire State and American Beacon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and American Beacon
The main advantage of trading using opposite Empire State and American Beacon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, American Beacon 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 American Beacon will offset losses from the drop in American Beacon's long position.| Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
| American Beacon vs. World Precious Minerals | American Beacon vs. International Investors Gold | American Beacon vs. Invesco Gold Special | American Beacon vs. Global Gold Fund |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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