Correlation Between SL Green and SOUTHERN

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

Diversification Opportunities for SL Green and SOUTHERN

-0.44

Correlation Coefficient

SL Green  SOUTHERN

Very good diversification

The 3 months correlation between SLG and SOUTHERN is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and SOUTHERN PER CORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHERN PER P 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 SOUTHERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOUTHERN PER P has no effect on the direction of SL Green i.e., SL Green and SOUTHERN go up and down completely randomly.

Pair Corralation between SL Green and SOUTHERN

Considering the 90-day investment horizon SL Green Realty is expected to generate 4.24 times more return on investment than SOUTHERN. However, SL Green is 4.24 times more volatile than SOUTHERN PER CORP. It trades about 0.09 of its potential returns per unit of risk. SOUTHERN PER CORP is currently generating about 0.0 per unit of risk. If you would invest  4,005  in SL Green Realty on September 28, 2024 and sell it today you would earn a total of  2,645  from holding SL Green Realty or generate 66.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	82.16%
Values	Daily Returns

SL Green Realty  vs.  SOUTHERN PER CORP

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

SOUTHERN PER P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOUTHERN PER CORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent 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 SOUTHERN PER CORP investors.

Pair Trading with SL Green and SOUTHERN

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

The idea behind SL Green Realty and SOUTHERN PER CORP 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.