Correlation Between SL Green and Highlands REIT
Can any of the company-specific risk be diversified away by investing in both SL Green and Highlands REIT 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 Highlands REIT 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 Highlands REIT, you can compare the effects of market volatilities on SL Green and Highlands REIT 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 Highlands REIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and Highlands REIT.
Diversification Opportunities for SL Green and Highlands REIT
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between SLG and Highlands is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and Highlands REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlands REIT 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 Highlands REIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlands REIT has no effect on the direction of SL Green i.e., SL Green and Highlands REIT go up and down completely randomly.
Pair Corralation between SL Green and Highlands REIT
Considering the 90-day investment horizon SL Green Realty is expected to under-perform the Highlands REIT. But the stock apears to be less risky and, when comparing its historical volatility, SL Green Realty is 35.8 times less risky than Highlands REIT. The stock trades about -0.13 of its potential returns per unit of risk. The Highlands REIT is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 4.77 in Highlands REIT on November 27, 2024 and sell it today you would lose (3.08) from holding Highlands REIT or give up 64.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
SL Green Realty vs. Highlands REIT
Performance |
| Timeline |
| SL Green Realty |
| Highlands REIT |
SL Green and Highlands REIT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SL Green and Highlands REIT
The main advantage of trading using opposite SL Green and Highlands REIT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green position performs unexpectedly, Highlands REIT 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 Highlands REIT will offset losses from the drop in Highlands REIT'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 |
| Highlands REIT vs. British Land | Highlands REIT vs. Presidio Property Trust | Highlands REIT vs. VICI Properties | Highlands REIT vs. W P Carey |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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