Correlation Between Empire State and Empire State

Can any of the company-specific risk be diversified away by investing in both Empire State 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 Empire State and Empire State 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 Empire State Realty, you can compare the effects of market volatilities on Empire State 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 Empire State with a short position of Empire State. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire State and Empire State.

Diversification Opportunities for Empire State and Empire State

0.9

Correlation Coefficient

Empire State  Empire State

Almost no diversification

The 3 months correlation between Empire and Empire is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty 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 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 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 Empire State i.e., Empire State and Empire State go up and down completely randomly.

Pair Corralation between Empire State and Empire State

Given the investment horizon of 90 days Empire State Realty is expected to under-perform the Empire State. But the stock apears to be less risky and, when comparing its historical volatility, Empire State Realty is 1.2 times less risky than Empire State. The stock trades about -0.17 of its potential returns per unit of risk. The Empire State Realty is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  1,005  in Empire State Realty on December 28, 2024 and sell it today you would lose (229.00) from holding Empire State Realty or give up 22.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	90.0%
Values	Daily Returns

Empire State Realty  vs.  Empire State Realty

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. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company 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. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Empire State and Empire State

The main advantage of trading using opposite Empire State and Empire State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire State 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 Empire State Realty 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..