Correlation Between SL Green and Diageo PLC
Can any of the company-specific risk be diversified away by investing in both SL Green and Diageo PLC 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 Diageo PLC 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 Diageo PLC ADR, you can compare the effects of market volatilities on SL Green and Diageo PLC 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 Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and Diageo PLC.
Diversification Opportunities for SL Green and Diageo PLC
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SLG and Diageo is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and Diageo PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo PLC ADR 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 Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC ADR has no effect on the direction of SL Green i.e., SL Green and Diageo PLC go up and down completely randomly.
Pair Corralation between SL Green and Diageo PLC
Considering the 90-day investment horizon SL Green Realty is expected to generate 2.43 times more return on investment than Diageo PLC. However, SL Green is 2.43 times more volatile than Diageo PLC ADR. It trades about 0.07 of its potential returns per unit of risk. Diageo PLC ADR is currently generating about -0.04 per unit of risk. If you would invest 2,874 in SL Green Realty on September 12, 2024 and sell it today you would earn a total of 4,541 from holding SL Green Realty or generate 158.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SL Green Realty vs. Diageo PLC ADR
Performance |
| Timeline |
| SL Green Realty |
| Diageo PLC ADR |
SL Green and Diageo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SL Green and Diageo PLC
The main advantage of trading using opposite SL Green and Diageo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green position performs unexpectedly, Diageo PLC 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 Diageo PLC will offset losses from the drop in Diageo PLC'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 |
| Diageo PLC vs. Andrew Peller Limited | Diageo PLC vs. Naked Wines plc | Diageo PLC vs. Willamette Valley Vineyards | Diageo PLC vs. Splash Beverage Group |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |