Correlation Between SL Green and Prologis

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

Diversification Opportunities for SL Green and Prologis

-0.08

Correlation Coefficient

SL Green  Prologis

Good diversification

The 3 months correlation between SLG and Prologis is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and Prologis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prologis 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 Prologis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prologis has no effect on the direction of SL Green i.e., SL Green and Prologis go up and down completely randomly.

Pair Corralation between SL Green and Prologis

Considering the 90-day investment horizon SL Green Realty is expected to under-perform the Prologis. In addition to that, SL Green is 1.18 times more volatile than Prologis. It trades about -0.08 of its total potential returns per unit of risk. Prologis is currently generating about 0.07 per unit of volatility. If you would invest  10,417  in Prologis on December 28, 2024 and sell it today you would earn a total of  658.00  from holding Prologis or generate 6.32% 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.  Prologis

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.

Prologis

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Prologis are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Prologis may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SL Green and Prologis

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

The idea behind SL Green Realty and Prologis 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.