Correlation Between SL Green and BTB Real

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

Diversification Opportunities for SL Green and BTB Real

0.47

Correlation Coefficient

SL Green  BTB Real

Very weak diversification

The 3 months correlation between SLG and BTB is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and BTB Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTB Real Estate 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 BTB Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTB Real Estate has no effect on the direction of SL Green i.e., SL Green and BTB Real go up and down completely randomly.

Pair Corralation between SL Green and BTB Real

Considering the 90-day investment horizon SL Green Realty is expected to under-perform the BTB Real. In addition to that, SL Green is 2.28 times more volatile than BTB Real Estate. It trades about -0.09 of its total potential returns per unit of risk. BTB Real Estate is currently generating about 0.07 per unit of volatility. If you would invest  235.00  in BTB Real Estate on December 26, 2024 and sell it today you would earn a total of  7.00  from holding BTB Real Estate or generate 2.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	85.25%
Values	Daily Returns

SL Green Realty  vs.  BTB Real Estate

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 latest weak performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

BTB Real Estate

Risk-Adjusted Performance

Modest

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

Pair Trading with SL Green and BTB Real

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

The idea behind SL Green Realty and BTB Real Estate 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.