Correlation Between SL Green and SunLink Health
Can any of the company-specific risk be diversified away by investing in both SL Green and SunLink Health 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 SunLink Health 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 SunLink Health Systems, you can compare the effects of market volatilities on SL Green and SunLink Health 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 SunLink Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and SunLink Health.
Diversification Opportunities for SL Green and SunLink Health
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SLG and SunLink is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and SunLink Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunLink Health Systems 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 SunLink Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunLink Health Systems has no effect on the direction of SL Green i.e., SL Green and SunLink Health go up and down completely randomly.
Pair Corralation between SL Green and SunLink Health
Considering the 90-day investment horizon SL Green Realty is expected to generate 0.45 times more return on investment than SunLink Health. However, SL Green Realty is 2.22 times less risky than SunLink Health. It trades about 0.05 of its potential returns per unit of risk. SunLink Health Systems is currently generating about -0.16 per unit of risk. If you would invest 7,758 in SL Green Realty on August 31, 2024 and sell it today you would earn a total of 127.00 from holding SL Green Realty or generate 1.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SL Green Realty vs. SunLink Health Systems
Performance |
| Timeline |
| SL Green Realty |
| SunLink Health Systems |
SL Green and SunLink Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SL Green and SunLink Health
The main advantage of trading using opposite SL Green and SunLink Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green position performs unexpectedly, SunLink Health 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 SunLink Health will offset losses from the drop in SunLink Health's long position.| SL Green vs. Boston Properties | SL Green vs. Alexandria Real Estate | SL Green vs. Hudson Pacific Properties | SL Green vs. Office Properties Income |
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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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