Correlation Between SL Green and PACIFIC

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

Diversification Opportunities for SL Green and PACIFIC

0.24

Correlation Coefficient

SL Green  PACIFIC

Modest diversification

The 3 months correlation between SLG and PACIFIC is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and PACIFIC GAS AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACIFIC GAS AND 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 PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACIFIC GAS AND has no effect on the direction of SL Green i.e., SL Green and PACIFIC go up and down completely randomly.

Pair Corralation between SL Green and PACIFIC

Considering the 90-day investment horizon SL Green Realty is expected to generate 5.79 times more return on investment than PACIFIC. However, SL Green is 5.79 times more volatile than PACIFIC GAS AND. It trades about 0.04 of its potential returns per unit of risk. PACIFIC GAS AND is currently generating about -0.09 per unit of risk. If you would invest  6,583  in SL Green Realty on October 8, 2024 and sell it today you would earn a total of  225.00  from holding SL Green Realty or generate 3.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.55%
Values	Daily Returns

SL Green Realty  vs.  PACIFIC GAS AND

SL Green Realty

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SL Green Realty are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, SL Green is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

PACIFIC GAS AND

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PACIFIC GAS AND has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PACIFIC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SL Green and PACIFIC

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

The idea behind SL Green Realty and PACIFIC GAS AND 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.