Correlation Between PACIFIC and SL Green

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

By analyzing existing cross correlation between PACIFIC GAS AND and SL Green Realty, you can compare the effects of market volatilities on PACIFIC and SL Green 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 PACIFIC with a short position of SL Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of PACIFIC and SL Green.

Diversification Opportunities for PACIFIC and SL Green

0.68

Correlation Coefficient

PACIFIC  SL Green

Poor diversification

The 3 months correlation between PACIFIC and SLG is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding PACIFIC GAS AND and SL Green Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SL Green Realty and PACIFIC 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 PACIFIC GAS AND are associated (or correlated) with SL Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SL Green Realty has no effect on the direction of PACIFIC i.e., PACIFIC and SL Green go up and down completely randomly.

Pair Corralation between PACIFIC and SL Green

Assuming the 90 days trading horizon PACIFIC GAS AND is expected to generate 24.42 times more return on investment than SL Green. However, PACIFIC is 24.42 times more volatile than SL Green Realty. It trades about 0.07 of its potential returns per unit of risk. SL Green Realty is currently generating about 0.06 per unit of risk. If you would invest  6,746  in PACIFIC GAS AND on October 23, 2024 and sell it today you would lose (462.00) from holding PACIFIC GAS AND or give up 6.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.36%
Values	Daily Returns

PACIFIC GAS AND  vs.  SL Green Realty

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 latest uncertain 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 PACIFIC GAS AND investors.

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 latest weak performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with PACIFIC and SL Green

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

The idea behind PACIFIC GAS AND and SL Green 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.