Correlation Between Sitio Royalties and Empire State

Can any of the company-specific risk be diversified away by investing in both Sitio Royalties and Empire State 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 Sitio Royalties and Empire State into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sitio Royalties Corp and Empire State Realty, you can compare the effects of market volatilities on Sitio Royalties and Empire State 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 Sitio Royalties with a short position of Empire State. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sitio Royalties and Empire State.

Diversification Opportunities for Sitio Royalties and Empire State

-0.13

Correlation Coefficient

Sitio Royalties  Empire State

Good diversification

The 3 months correlation between Sitio and Empire is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sitio Royalties Corp and Empire State Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire State Realty and Sitio Royalties 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 Sitio Royalties Corp are associated (or correlated) with Empire State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire State Realty has no effect on the direction of Sitio Royalties i.e., Sitio Royalties and Empire State go up and down completely randomly.

Pair Corralation between Sitio Royalties and Empire State

Considering the 90-day investment horizon Sitio Royalties Corp is expected to generate 1.03 times more return on investment than Empire State. However, Sitio Royalties is 1.03 times more volatile than Empire State Realty. It trades about 0.1 of its potential returns per unit of risk. Empire State Realty is currently generating about -0.21 per unit of risk. If you would invest  1,845  in Sitio Royalties Corp on December 28, 2024 and sell it today you would earn a total of  185.00  from holding Sitio Royalties Corp or generate 10.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sitio Royalties Corp  vs.  Empire State Realty

Sitio Royalties Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sitio Royalties Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Sitio Royalties may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Empire State Realty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Empire State Realty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Sitio Royalties and Empire State

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

The idea behind Sitio Royalties Corp and Empire State Realty 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.