Correlation Between Empire State and FRN

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

Diversification Opportunities for Empire State and FRN

0.0

Correlation Coefficient

Empire State  FRN

Pay attention - limited upside

The 3 months correlation between Empire and FRN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and FRN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FRN 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 FRN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FRN has no effect on the direction of Empire State i.e., Empire State and FRN go up and down completely randomly.

Pair Corralation between Empire State and FRN

If you would invest (100.00) in FRN on December 27, 2024 and sell it today you would earn a total of  100.00  from holding FRN or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Empire State Realty  vs.  FRN

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.

FRN

Risk-Adjusted Performance

Very Weak

Over the last 90 days FRN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, FRN is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Empire State and FRN

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

The idea behind Empire State Realty and FRN 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.