Correlation Between Empire State and La Rosa
Can any of the company-specific risk be diversified away by investing in both Empire State and La Rosa 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 La Rosa 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 La Rosa Holdings, you can compare the effects of market volatilities on Empire State and La Rosa 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 La Rosa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and La Rosa.
Diversification Opportunities for Empire State and La Rosa
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Empire and LRHC is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and La Rosa Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Rosa 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 La Rosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Rosa Holdings has no effect on the direction of Empire State i.e., Empire State and La Rosa go up and down completely randomly.
Pair Corralation between Empire State and La Rosa
Given the investment horizon of 90 days Empire State Realty is expected to generate 0.33 times more return on investment than La Rosa. However, Empire State Realty is 3.0 times less risky than La Rosa. It trades about 0.04 of its potential returns per unit of risk. La Rosa Holdings is currently generating about -0.2 per unit of risk. If you would invest 1,085 in Empire State Realty on August 28, 2024 and sell it today you would earn a total of 11.00 from holding Empire State Realty or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Empire State Realty vs. La Rosa Holdings
Performance |
| Timeline |
| Empire State Realty |
| La Rosa Holdings |
Empire State and La Rosa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire State and La Rosa
The main advantage of trading using opposite Empire State and La Rosa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State position performs unexpectedly, La Rosa 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 La Rosa will offset losses from the drop in La Rosa's 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 |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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