Correlation Between SL Green and BTB Real
Can any of the company-specific risk be diversified away by investing in both SL Green and BTB Real 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 BTB Real 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 BTB Real Estate, you can compare the effects of market volatilities on SL Green and BTB Real 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 BTB Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and BTB Real.
Diversification Opportunities for SL Green and BTB Real
Weak diversification
The 3 months correlation between SLG and BTB is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and BTB Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTB Real Estate 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 BTB Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTB Real Estate has no effect on the direction of SL Green i.e., SL Green and BTB Real go up and down completely randomly.
Pair Corralation between SL Green and BTB Real
Considering the 90-day investment horizon SL Green Realty is expected to generate 3.13 times more return on investment than BTB Real. However, SL Green is 3.13 times more volatile than BTB Real Estate. It trades about 0.16 of its potential returns per unit of risk. BTB Real Estate is currently generating about 0.07 per unit of risk. If you would invest 7,415 in SL Green Realty on September 2, 2024 and sell it today you would earn a total of 404.00 from holding SL Green Realty or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SL Green Realty vs. BTB Real Estate
Performance |
| Timeline |
| SL Green Realty |
| BTB Real Estate |
SL Green and BTB Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SL Green and BTB Real
The main advantage of trading using opposite SL Green and BTB Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green position performs unexpectedly, BTB Real 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 BTB Real will offset losses from the drop in BTB Real's long position.| SL Green vs. Boston Properties | SL Green vs. Douglas Emmett | SL Green vs. Kilroy Realty Corp | SL Green vs. Alexandria Real Estate |
| BTB Real vs. Boston Properties | BTB Real vs. Kilroy Realty Corp | BTB Real vs. SL Green Realty | BTB Real vs. Vornado Realty Trust |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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