Correlation Between Empire State and OFX Group

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

Diversification Opportunities for Empire State and OFX Group

0.2

Correlation Coefficient

Empire State  OFX Group

Modest diversification

The 3 months correlation between Empire and OFX is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and OFX Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OFX Group 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 OFX Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OFX Group has no effect on the direction of Empire State i.e., Empire State and OFX Group go up and down completely randomly.

Pair Corralation between Empire State and OFX Group

Given the investment horizon of 90 days Empire State Realty is expected to under-perform the OFX Group. But the stock apears to be less risky and, when comparing its historical volatility, Empire State Realty is 1.21 times less risky than OFX Group. The stock trades about -0.21 of its potential returns per unit of risk. The OFX Group Ltd is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  435.00  in OFX Group Ltd on December 28, 2024 and sell it today you would lose (70.00) from holding OFX Group Ltd or give up 16.09% of portfolio value over 90 days.

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

Empire State Realty  vs.  OFX Group Ltd

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 weak 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.

OFX Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days OFX Group Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain fairly 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.

Pair Trading with Empire State and OFX Group

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

The idea behind Empire State Realty and OFX Group Ltd 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.