Correlation Between SL Green and Corporate Office
Can any of the company-specific risk be diversified away by investing in both SL Green and Corporate Office 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 SL Green and Corporate Office into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SL Green Realty and Corporate Office Properties, you can compare the effects of market volatilities on SL Green and Corporate Office 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 SL Green with a short position of Corporate Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and Corporate Office.
Diversification Opportunities for SL Green and Corporate Office
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between GEI and Corporate is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and Corporate Office Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Office Pro and SL Green 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 SL Green Realty are associated (or correlated) with Corporate Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Office Pro has no effect on the direction of SL Green i.e., SL Green and Corporate Office go up and down completely randomly.
Pair Corralation between SL Green and Corporate Office
Assuming the 90 days horizon SL Green Realty is expected to generate 1.26 times more return on investment than Corporate Office. However, SL Green is 1.26 times more volatile than Corporate Office Properties. It trades about 0.16 of its potential returns per unit of risk. Corporate Office Properties is currently generating about 0.07 per unit of risk. If you would invest 7,041 in SL Green Realty on August 28, 2024 and sell it today you would earn a total of 471.00 from holding SL Green Realty or generate 6.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SL Green Realty vs. Corporate Office Properties
Performance |
| Timeline |
| SL Green Realty |
| Corporate Office Pro |
SL Green and Corporate Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SL Green and Corporate Office
The main advantage of trading using opposite SL Green and Corporate Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green position performs unexpectedly, Corporate Office 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 Corporate Office will offset losses from the drop in Corporate Office's long position.The idea behind SL Green Realty and Corporate Office Properties pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Corporate Office vs. COLUMBIA SPORTSWEAR | Corporate Office vs. WILLIS LEASE FIN | Corporate Office vs. USWE SPORTS AB | Corporate Office vs. DICKS Sporting Goods |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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