Correlation Between Empire State and Aena SME

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

Diversification Opportunities for Empire State and Aena SME

-0.37

Correlation Coefficient

Empire State  Aena SME

Very good diversification

The 3 months correlation between Empire and Aena is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Aena SME SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aena SME SA 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 Aena SME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aena SME SA has no effect on the direction of Empire State i.e., Empire State and Aena SME go up and down completely randomly.

Pair Corralation between Empire State and Aena SME

Given the investment horizon of 90 days Empire State Realty is expected to under-perform the Aena SME. In addition to that, Empire State is 1.39 times more volatile than Aena SME SA. It trades about -0.22 of its total potential returns per unit of risk. Aena SME SA is currently generating about 0.08 per unit of volatility. If you would invest  21,420  in Aena SME SA on November 29, 2024 and sell it today you would earn a total of  1,136  from holding Aena SME SA or generate 5.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Empire State Realty  vs.  Aena SME SA

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 March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Aena SME SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aena SME SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Aena SME is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Empire State and Aena SME

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

The idea behind Empire State Realty and Aena SME SA 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.