Correlation Between Empire State and Shyft

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

Diversification Opportunities for Empire State and Shyft

0.64

Correlation Coefficient

Empire State  Shyft

Poor diversification

The 3 months correlation between Empire and Shyft is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Shyft Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shyft 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 Shyft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shyft Group has no effect on the direction of Empire State i.e., Empire State and Shyft go up and down completely randomly.

Pair Corralation between Empire State and Shyft

Given the investment horizon of 90 days Empire State Realty is expected to generate 0.42 times more return on investment than Shyft. However, Empire State Realty is 2.4 times less risky than Shyft. It trades about -0.23 of its potential returns per unit of risk. Shyft Group is currently generating about -0.1 per unit of risk. If you would invest  1,105  in Empire State Realty on November 27, 2024 and sell it today you would lose (237.00) from holding Empire State Realty or give up 21.45% of portfolio value over 90 days.

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

Empire State Realty  vs.  Shyft Group

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.

Shyft Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shyft Group 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 nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Empire State and Shyft

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

The idea behind Empire State Realty and Shyft Group 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.