Correlation Between Belpointe PREP and Empire State

Can any of the company-specific risk be diversified away by investing in both Belpointe PREP and Empire State 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 Belpointe PREP and Empire State into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Belpointe PREP LLC and Empire State Realty, you can compare the effects of market volatilities on Belpointe PREP and Empire State 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 Belpointe PREP with a short position of Empire State. Check out your portfolio center. Please also check ongoing floating volatility patterns of Belpointe PREP and Empire State.

Diversification Opportunities for Belpointe PREP and Empire State

0.59

Correlation Coefficient

Belpointe PREP  Empire State

Very weak diversification

The 3 months correlation between Belpointe and Empire is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Belpointe PREP LLC and Empire State Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire State Realty and Belpointe PREP 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 Belpointe PREP LLC are associated (or correlated) with Empire State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire State Realty has no effect on the direction of Belpointe PREP i.e., Belpointe PREP and Empire State go up and down completely randomly.

Pair Corralation between Belpointe PREP and Empire State

Allowing for the 90-day total investment horizon Belpointe PREP LLC is expected to generate 1.47 times more return on investment than Empire State. However, Belpointe PREP is 1.47 times more volatile than Empire State Realty. It trades about -0.07 of its potential returns per unit of risk. Empire State Realty is currently generating about -0.16 per unit of risk. If you would invest  7,600  in Belpointe PREP LLC on December 21, 2024 and sell it today you would lose (1,175) from holding Belpointe PREP LLC or give up 15.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Belpointe PREP LLC  vs.  Empire State Realty

Belpointe PREP LLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Belpointe PREP LLC 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 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.

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. Even with weak performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Belpointe PREP and Empire State

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

The idea behind Belpointe PREP LLC and Empire State Realty 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 Stocks Directory module to find actively traded stocks across global markets.