Correlation Between SL Green and Stagwell

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

Diversification Opportunities for SL Green and Stagwell

0.25

Correlation Coefficient

SL Green  Stagwell

Modest diversification

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

Pair Corralation between SL Green and Stagwell

Considering the 90-day investment horizon SL Green Realty is expected to generate 1.45 times more return on investment than Stagwell. However, SL Green is 1.45 times more volatile than Stagwell. It trades about -0.31 of its potential returns per unit of risk. Stagwell is currently generating about -0.47 per unit of risk. If you would invest  7,870  in SL Green Realty on September 24, 2024 and sell it today you would lose (1,069) from holding SL Green Realty or give up 13.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

SL Green Realty  vs.  Stagwell

SL Green Realty

Risk-Adjusted Performance

0 of 100

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 nearly stable essential indicators, SL Green is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Stagwell

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stagwell has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Stagwell is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with SL Green and Stagwell

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

The idea behind SL Green Realty and Stagwell 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.