Correlation Between SL Green and America Great
Can any of the company-specific risk be diversified away by investing in both SL Green and America Great 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 America Great 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 America Great Health, you can compare the effects of market volatilities on SL Green and America Great 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 America Great. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and America Great.
Diversification Opportunities for SL Green and America Great
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SLG and America is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and America Great Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on America Great Health 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 America Great. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of America Great Health has no effect on the direction of SL Green i.e., SL Green and America Great go up and down completely randomly.
Pair Corralation between SL Green and America Great
Considering the 90-day investment horizon SL Green Realty is expected to under-perform the America Great. But the stock apears to be less risky and, when comparing its historical volatility, SL Green Realty is 13.68 times less risky than America Great. The stock trades about -0.11 of its potential returns per unit of risk. The America Great Health is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 0.02 in America Great Health on December 1, 2024 and sell it today you would earn a total of 0.03 from holding America Great Health or generate 150.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 93.75% |
Values | Daily Returns |
SL Green Realty vs. America Great Health
Performance |
Timeline |
SL Green Realty |
America Great Health |
SL Green and America Great Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SL Green and America Great
The main advantage of trading using opposite SL Green and America Great positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green position performs unexpectedly, America Great 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 America Great will offset losses from the drop in America Great's long position.SL Green vs. Boston Properties | SL Green vs. Douglas Emmett | SL Green vs. Kilroy Realty Corp | SL Green vs. Alexandria Real Estate |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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