Correlation Between SL Green and Dow Jones
Can any of the company-specific risk be diversified away by investing in both SL Green and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on SL Green and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and Dow Jones.
Diversification Opportunities for SL Green and Dow Jones
Very poor diversification
The 3 months correlation between SLG and Dow is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of SL Green i.e., SL Green and Dow Jones go up and down completely randomly.
Pair Corralation between SL Green and Dow Jones
Considering the 90-day investment horizon SL Green is expected to generate 1.6 times less return on investment than Dow Jones. In addition to that, SL Green is 1.82 times more volatile than Dow Jones Industrial. It trades about 0.09 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.26 per unit of volatility. If you would invest 4,238,757 in Dow Jones Industrial on August 27, 2024 and sell it today you would earn a total of 234,900 from holding Dow Jones Industrial or generate 5.54% 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. Dow Jones Industrial
Performance |
| Timeline |
SL Green and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
SL Green Realty
Pair trading matchups for SL Green
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with SL Green and Dow Jones
The main advantage of trading using opposite SL Green and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| SL Green vs. Boston Properties | SL Green vs. Douglas Emmett | SL Green vs. Kilroy Realty Corp | SL Green vs. Alexandria Real Estate |
| Dow Jones vs. Meiwu Technology Co | Dow Jones vs. 17 Education Technology | Dow Jones vs. 51Talk Online Education | Dow Jones vs. Afya |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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