Correlation Between Empire State and Wasatch International

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

Diversification Opportunities for Empire State and Wasatch International

0.28

Correlation Coefficient

Empire State  Wasatch International

Modest diversification

The 3 months correlation between Empire and WASATCH is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and Wasatch International Opportun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch International 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 Wasatch International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch International has no effect on the direction of Empire State i.e., Empire State and Wasatch International go up and down completely randomly.

Pair Corralation between Empire State and Wasatch International

Given the investment horizon of 90 days Empire State Realty is expected to under-perform the Wasatch International. In addition to that, Empire State is 1.83 times more volatile than Wasatch International Opportunities. It trades about -0.16 of its total potential returns per unit of risk. Wasatch International Opportunities is currently generating about 0.07 per unit of volatility. If you would invest  299.00  in Wasatch International Opportunities on November 19, 2024 and sell it today you would earn a total of  11.00  from holding Wasatch International Opportunities or generate 3.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Empire State Realty  vs.  Wasatch International Opportun

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.

Wasatch International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wasatch International Opportunities are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Wasatch International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Empire State and Wasatch International

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

The idea behind Empire State Realty and Wasatch International Opportunities 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.