Correlation Between Broadstone Net and Empire State

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

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

Diversification Opportunities for Broadstone Net and Empire State

0.28

Correlation Coefficient

Broadstone Net  Empire State

Modest diversification

The 3 months correlation between Broadstone and Empire is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Broadstone Net Lease 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 Broadstone Net 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 Broadstone Net Lease 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 Broadstone Net i.e., Broadstone Net and Empire State go up and down completely randomly.

Pair Corralation between Broadstone Net and Empire State

Considering the 90-day investment horizon Broadstone Net is expected to generate 2.09 times less return on investment than Empire State. But when comparing it to its historical volatility, Broadstone Net Lease is 1.57 times less risky than Empire State. It trades about 0.03 of its potential returns per unit of risk. Empire State Realty is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  681.00  in Empire State Realty on December 1, 2024 and sell it today you would earn a total of  246.00  from holding Empire State Realty or generate 36.12% return on investment over 90 days.

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

Broadstone Net Lease  vs.  Empire State Realty

Broadstone Net Lease

Risk-Adjusted Performance

Very Weak

Over the last 90 days Broadstone Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Broadstone Net is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional 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 Broadstone Net and Empire State

The main advantage of trading using opposite Broadstone Net and Empire State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Broadstone Net 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 Broadstone Net Lease 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.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.