Correlation Between SL Green and Melcor Developments
Can any of the company-specific risk be diversified away by investing in both SL Green and Melcor Developments 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 Melcor Developments 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 Melcor Developments, you can compare the effects of market volatilities on SL Green and Melcor Developments 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 Melcor Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and Melcor Developments.
Diversification Opportunities for SL Green and Melcor Developments
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SLG and Melcor is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and Melcor Developments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melcor Developments 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 Melcor Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melcor Developments has no effect on the direction of SL Green i.e., SL Green and Melcor Developments go up and down completely randomly.
Pair Corralation between SL Green and Melcor Developments
Considering the 90-day investment horizon SL Green Realty is expected to generate 2.36 times more return on investment than Melcor Developments. However, SL Green is 2.36 times more volatile than Melcor Developments. It trades about 0.12 of its potential returns per unit of risk. Melcor Developments is currently generating about 0.1 per unit of risk. If you would invest 4,031 in SL Green Realty on September 3, 2024 and sell it today you would earn a total of 3,543 from holding SL Green Realty or generate 87.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 67.21% |
| Values | Daily Returns |
SL Green Realty vs. Melcor Developments
Performance |
| Timeline |
| SL Green Realty |
| Melcor Developments |
SL Green and Melcor Developments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SL Green and Melcor Developments
The main advantage of trading using opposite SL Green and Melcor Developments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green position performs unexpectedly, Melcor Developments 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 Melcor Developments will offset losses from the drop in Melcor Developments' long position.| SL Green vs. Boston Properties | SL Green vs. Douglas Emmett | SL Green vs. Kilroy Realty Corp | SL Green vs. Alexandria Real Estate |
| Melcor Developments vs. Ashford Hospitality Trust | Melcor Developments vs. Ashford Hospitality Trust | Melcor Developments vs. Ashford Hospitality Trust | Melcor Developments vs. Ashford Hospitality 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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