Correlation Between Empire State and Femasys

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

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

Diversification Opportunities for Empire State and Femasys

0.44

Correlation Coefficient

Empire State  Femasys

Very weak diversification

The 3 months correlation between Empire and Femasys is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Femasys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Femasys and Empire State 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 Empire State Realty are associated (or correlated) with Femasys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Femasys has no effect on the direction of Empire State i.e., Empire State and Femasys go up and down completely randomly.

Pair Corralation between Empire State and Femasys

Given the investment horizon of 90 days Empire State Realty is expected to generate 11.63 times more return on investment than Femasys. However, Empire State is 11.63 times more volatile than Femasys. It trades about 0.06 of its potential returns per unit of risk. Femasys is currently generating about 0.05 per unit of risk. If you would invest  986.00  in Empire State Realty on October 22, 2024 and sell it today you would lose (23.00) from holding Empire State Realty or give up 2.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	91.53%
Values	Daily Returns

Empire State Realty  vs.  Femasys

Empire State Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Empire State Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Femasys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Femasys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Empire State and Femasys

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

The idea behind Empire State Realty and Femasys 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.