Correlation Between SL Green and Dream Homes
Can any of the company-specific risk be diversified away by investing in both SL Green and Dream Homes 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 Dream Homes 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 Dream Homes Development, you can compare the effects of market volatilities on SL Green and Dream Homes 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 Dream Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and Dream Homes.
Diversification Opportunities for SL Green and Dream Homes
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SLG and Dream is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and Dream Homes Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Homes Development 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 Dream Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Homes Development has no effect on the direction of SL Green i.e., SL Green and Dream Homes go up and down completely randomly.
Pair Corralation between SL Green and Dream Homes
Considering the 90-day investment horizon SL Green Realty is expected to generate 0.37 times more return on investment than Dream Homes. However, SL Green Realty is 2.73 times less risky than Dream Homes. It trades about 0.07 of its potential returns per unit of risk. Dream Homes Development is currently generating about 0.01 per unit of risk. If you would invest 3,254 in SL Green Realty on August 24, 2024 and sell it today you would earn a total of 4,709 from holding SL Green Realty or generate 144.71% 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. Dream Homes Development
Performance |
| Timeline |
| SL Green Realty |
| Dream Homes Development |
SL Green and Dream Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SL Green and Dream Homes
The main advantage of trading using opposite SL Green and Dream Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green position performs unexpectedly, Dream Homes 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 Dream Homes will offset losses from the drop in Dream Homes' long position.| SL Green vs. Boston Properties | SL Green vs. Douglas Emmett | SL Green vs. Kilroy Realty Corp | SL Green vs. Alexandria Real Estate |
| Dream Homes vs. Greystone Logistics | Dream Homes vs. Mill City Ventures | Dream Homes vs. Barksdale Resources Corp | Dream Homes vs. Black Diamond 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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