Correlation Between Realty Income and SL Green
Can any of the company-specific risk be diversified away by investing in both Realty Income and SL Green 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 Realty Income and SL Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Realty Income and SL Green Realty, you can compare the effects of market volatilities on Realty Income and SL Green 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 Realty Income with a short position of SL Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Realty Income and SL Green.
Diversification Opportunities for Realty Income and SL Green
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Realty and SLG is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Realty Income and SL Green Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SL Green Realty and Realty Income 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 Realty Income are associated (or correlated) with SL Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SL Green Realty has no effect on the direction of Realty Income i.e., Realty Income and SL Green go up and down completely randomly.
Pair Corralation between Realty Income and SL Green
Taking into account the 90-day investment horizon Realty Income is expected to under-perform the SL Green. But the stock apears to be less risky and, when comparing its historical volatility, Realty Income is 2.02 times less risky than SL Green. The stock trades about -0.14 of its potential returns per unit of risk. The SL Green Realty is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 7,610 in SL Green Realty on September 18, 2024 and sell it today you would lose (199.00) from holding SL Green Realty or give up 2.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Realty Income vs. SL Green Realty
Performance |
| Timeline |
| Realty Income |
| SL Green Realty |
Realty Income and SL Green Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Realty Income and SL Green
The main advantage of trading using opposite Realty Income and SL Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Realty Income position performs unexpectedly, SL Green 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 SL Green will offset losses from the drop in SL Green's long position.| Realty Income vs. Federal Realty Investment | Realty Income vs. Macerich Company | Realty Income vs. National Retail Properties | Realty Income vs. Kimco 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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