Correlation Between Auckland International and Empire State

Can any of the company-specific risk be diversified away by investing in both Auckland International and Empire State 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 Auckland International and Empire State into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Auckland International Airport and Empire State Realty, you can compare the effects of market volatilities on Auckland International and Empire State 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 Auckland International with a short position of Empire State. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auckland International and Empire State.

Diversification Opportunities for Auckland International and Empire State

0.18

Correlation Coefficient

Auckland International  Empire State

Average diversification

The 3 months correlation between Auckland and Empire is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Auckland International Airport and Empire State Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire State Realty and Auckland International 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 Auckland International Airport are associated (or correlated) with Empire State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire State Realty has no effect on the direction of Auckland International i.e., Auckland International and Empire State go up and down completely randomly.

Pair Corralation between Auckland International and Empire State

Assuming the 90 days horizon Auckland International Airport is expected to generate 1.38 times more return on investment than Empire State. However, Auckland International is 1.38 times more volatile than Empire State Realty. It trades about 0.04 of its potential returns per unit of risk. Empire State Realty is currently generating about -0.23 per unit of risk. If you would invest  2,183  in Auckland International Airport on December 30, 2024 and sell it today you would earn a total of  99.00  from holding Auckland International Airport or generate 4.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Auckland International Airport  vs.  Empire State Realty

Auckland International

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Auckland International Airport are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Auckland International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Empire State Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Empire State Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Auckland International and Empire State

The main advantage of trading using opposite Auckland International and Empire State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auckland International position performs unexpectedly, Empire State 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 Empire State will offset losses from the drop in Empire State's long position.

The idea behind Auckland International Airport and Empire State 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.