Correlation Between Simon Property and SL Green

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Can any of the company-specific risk be diversified away by investing in both Simon Property and SL Green 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 Simon Property and SL Green into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simon Property Group and SL Green Realty, you can compare the effects of market volatilities on Simon Property and SL Green 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 Simon Property with a short position of SL Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simon Property and SL Green.

Diversification Opportunities for Simon Property and SL Green

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Simon and SLG is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Simon Property Group and SL Green Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SL Green Realty and Simon Property 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 Simon Property Group are associated (or correlated) with SL Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SL Green Realty has no effect on the direction of Simon Property i.e., Simon Property and SL Green go up and down completely randomly.

Pair Corralation between Simon Property and SL Green

Considering the 90-day investment horizon Simon Property Group is expected to generate 0.56 times more return on investment than SL Green. However, Simon Property Group is 1.77 times less risky than SL Green. It trades about 0.04 of its potential returns per unit of risk. SL Green Realty is currently generating about -0.07 per unit of risk. If you would invest  17,878  in Simon Property Group on September 18, 2024 and sell it today you would earn a total of  118.00  from holding Simon Property Group or generate 0.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Simon Property Group  vs.  SL Green Realty

 Performance 
       Timeline  
Simon Property Group 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Simon Property Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Simon Property may actually be approaching a critical reversion point that can send shares even higher in January 2025.
SL Green Realty 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in SL Green Realty are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, SL Green is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Simon Property and SL Green Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Simon Property and SL Green

The main advantage of trading using opposite Simon Property and SL Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simon Property position performs unexpectedly, SL Green 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 SL Green will offset losses from the drop in SL Green's long position.
The idea behind Simon Property Group and SL Green Realty pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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