Correlation Between Empire State and VOXX International

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

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

Diversification Opportunities for Empire State and VOXX International

0.47

Correlation Coefficient

Empire State  VOXX International

Very weak diversification

The 3 months correlation between Empire and VOXX is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Empire State Realty and VOXX International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOXX International and Empire State 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 Empire State Realty are associated (or correlated) with VOXX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VOXX International has no effect on the direction of Empire State i.e., Empire State and VOXX International go up and down completely randomly.

Pair Corralation between Empire State and VOXX International

Given the investment horizon of 90 days Empire State is expected to generate 10.59 times less return on investment than VOXX International. But when comparing it to its historical volatility, Empire State Realty is 3.21 times less risky than VOXX International. It trades about 0.04 of its potential returns per unit of risk. VOXX International is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  549.00  in VOXX International on August 30, 2024 and sell it today you would earn a total of  210.00  from holding VOXX International or generate 38.25% return on investment over 90 days.

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

Empire State Realty  vs.  VOXX International

Empire State Realty

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Empire State Realty are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Empire State is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

VOXX International

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VOXX International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, VOXX International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Empire State and VOXX International

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

The idea behind Empire State Realty and VOXX International 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.