Correlation Between Empire State and Cousins Properties
Can any of the company-specific risk be diversified away by investing in both Empire State and Cousins Properties 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 Cousins Properties 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 Cousins Properties Incorporated, you can compare the effects of market volatilities on Empire State and Cousins Properties 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 Cousins Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Cousins Properties.
Diversification Opportunities for Empire State and Cousins Properties
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Empire and Cousins is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Cousins Properties Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cousins Properties 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 Cousins Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cousins Properties has no effect on the direction of Empire State i.e., Empire State and Cousins Properties go up and down completely randomly.
Pair Corralation between Empire State and Cousins Properties
Given the investment horizon of 90 days Empire State is expected to generate 2.09 times less return on investment than Cousins Properties. In addition to that, Empire State is 1.22 times more volatile than Cousins Properties Incorporated. It trades about 0.04 of its total potential returns per unit of risk. Cousins Properties Incorporated is currently generating about 0.1 per unit of volatility. If you would invest 3,114 in Cousins Properties Incorporated on August 28, 2024 and sell it today you would earn a total of 76.00 from holding Cousins Properties Incorporated or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Empire State Realty vs. Cousins Properties Incorporate
Performance |
| Timeline |
| Empire State Realty |
| Cousins Properties |
Empire State and Cousins Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and Cousins Properties
The main advantage of trading using opposite Empire State and Cousins Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, Cousins Properties 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 Cousins Properties will offset losses from the drop in Cousins Properties' long position.| Empire State vs. Empire State Realty | Empire State vs. Cousins Properties Incorporated | Empire State vs. Brandywine Realty Trust | Empire State vs. Piedmont Office Realty |
| Cousins Properties vs. Highwoods Properties | Cousins Properties vs. Douglas Emmett | Cousins Properties vs. Equity Commonwealth | Cousins Properties vs. Kilroy Realty Corp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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