Correlation Between SL Green and ORIX JREIT

Can any of the company-specific risk be diversified away by investing in both SL Green and ORIX JREIT 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 SL Green and ORIX JREIT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SL Green Realty and ORIX JREIT INC, you can compare the effects of market volatilities on SL Green and ORIX JREIT 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 SL Green with a short position of ORIX JREIT. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and ORIX JREIT.

Diversification Opportunities for SL Green and ORIX JREIT

-0.25

Correlation Coefficient

SL Green  ORIX JREIT

Very good diversification

The 3 months correlation between GEI and ORIX is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and ORIX JREIT INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORIX JREIT INC and SL Green 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 SL Green Realty are associated (or correlated) with ORIX JREIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORIX JREIT INC has no effect on the direction of SL Green i.e., SL Green and ORIX JREIT go up and down completely randomly.

Pair Corralation between SL Green and ORIX JREIT

Assuming the 90 days horizon SL Green Realty is expected to under-perform the ORIX JREIT. In addition to that, SL Green is 1.38 times more volatile than ORIX JREIT INC. It trades about -0.06 of its total potential returns per unit of risk. ORIX JREIT INC is currently generating about 0.17 per unit of volatility. If you would invest  96,766  in ORIX JREIT INC on December 2, 2024 and sell it today you would earn a total of  9,234  from holding ORIX JREIT INC or generate 9.54% return on investment over 90 days.

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

SL Green Realty  vs.  ORIX JREIT INC

SL Green Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days SL Green Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ORIX JREIT INC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ORIX JREIT INC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ORIX JREIT is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with SL Green and ORIX JREIT

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

The idea behind SL Green Realty and ORIX JREIT INC 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.