Correlation Between SL Green and Piedmont Office
Can any of the company-specific risk be diversified away by investing in both SL Green and Piedmont 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 Piedmont 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 Piedmont Office Realty, you can compare the effects of market volatilities on SL Green and Piedmont 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 Piedmont Office. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and Piedmont Office.
Diversification Opportunities for SL Green and Piedmont Office
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SLG-PI and Piedmont is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and Piedmont Office Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piedmont Office Realty 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 Piedmont Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piedmont Office Realty has no effect on the direction of SL Green i.e., SL Green and Piedmont Office go up and down completely randomly.
Pair Corralation between SL Green and Piedmont Office
Assuming the 90 days trading horizon SL Green Realty is expected to generate 0.43 times more return on investment than Piedmont Office. However, SL Green Realty is 2.35 times less risky than Piedmont Office. It trades about -0.04 of its potential returns per unit of risk. Piedmont Office Realty is currently generating about -0.07 per unit of risk. If you would invest 2,375 in SL Green Realty on November 3, 2024 and sell it today you would lose (20.00) from holding SL Green Realty or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SL Green Realty vs. Piedmont Office Realty
Performance |
| Timeline |
| SL Green Realty |
| Piedmont Office Realty |
SL Green and Piedmont Office Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SL Green and Piedmont Office
The main advantage of trading using opposite SL Green and Piedmont Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green position performs unexpectedly, Piedmont 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 Piedmont Office will offset losses from the drop in Piedmont Office's long position.| SL Green vs. Vornado Realty Trust | SL Green vs. Vornado Realty Trust | SL Green vs. City Office REIT | SL Green vs. Vornado Realty Trust |
| Piedmont Office vs. Highwoods Properties | Piedmont Office vs. Douglas Emmett | Piedmont Office vs. Kilroy Realty Corp | Piedmont Office vs. Cousins Properties Incorporated |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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