Correlation Between SL Green and 02005NBS8

Can any of the company-specific risk be diversified away by investing in both SL Green and 02005NBS8 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 02005NBS8 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 ALLY 67 14 FEB 33, you can compare the effects of market volatilities on SL Green and 02005NBS8 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 02005NBS8. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and 02005NBS8.

Diversification Opportunities for SL Green and 02005NBS8

0.15

Correlation Coefficient

SL Green  02005NBS8

Average diversification

The 3 months correlation between SLG and 02005NBS8 is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and ALLY 67 14 FEB 33 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALLY 67 14 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 02005NBS8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALLY 67 14 has no effect on the direction of SL Green i.e., SL Green and 02005NBS8 go up and down completely randomly.

Pair Corralation between SL Green and 02005NBS8

Considering the 90-day investment horizon SL Green Realty is expected to under-perform the 02005NBS8. In addition to that, SL Green is 1.11 times more volatile than ALLY 67 14 FEB 33. It trades about -0.11 of its total potential returns per unit of risk. ALLY 67 14 FEB 33 is currently generating about -0.09 per unit of volatility. If you would invest  10,060  in ALLY 67 14 FEB 33 on December 23, 2024 and sell it today you would lose (1,060) from holding ALLY 67 14 FEB 33 or give up 10.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

SL Green Realty  vs.  ALLY 67 14 FEB 33

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 weak performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ALLY 67 14

Risk-Adjusted Performance

Weak

Over the last 90 days ALLY 67 14 FEB 33 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for ALLY 67 14 FEB 33 investors.

Pair Trading with SL Green and 02005NBS8

The main advantage of trading using opposite SL Green and 02005NBS8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green position performs unexpectedly, 02005NBS8 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 02005NBS8 will offset losses from the drop in 02005NBS8's long position.

The idea behind SL Green Realty and ALLY 67 14 FEB 33 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.