Correlation Between Noble Plc and SL Green

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

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

Diversification Opportunities for Noble Plc and SL Green

-0.08

Correlation Coefficient

Noble Plc  SL Green

Good diversification

The 3 months correlation between Noble and SLG is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Noble plc 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 Noble Plc 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 Noble plc 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 Noble Plc i.e., Noble Plc and SL Green go up and down completely randomly.

Pair Corralation between Noble Plc and SL Green

Allowing for the 90-day total investment horizon Noble plc is expected to under-perform the SL Green. But the stock apears to be less risky and, when comparing its historical volatility, Noble plc is 1.43 times less risky than SL Green. The stock trades about 0.0 of its potential returns per unit of risk. The SL Green Realty is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,992  in SL Green Realty on September 30, 2024 and sell it today you would earn a total of  3,632  from holding SL Green Realty or generate 121.39% return on investment over 90 days.

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

Noble plc  vs.  SL Green Realty

Noble plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Noble plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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

Pair Trading with Noble Plc and SL Green

The main advantage of trading using opposite Noble Plc and SL Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noble Plc 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 Noble plc 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.