Correlation Between SL Green and National Retail

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

Diversification Opportunities for SL Green and National Retail

-0.67

Correlation Coefficient

SL Green  National Retail

Excellent diversification

The 3 months correlation between SLG and National is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and National Retail Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Retail Prop 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 National Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Retail Prop has no effect on the direction of SL Green i.e., SL Green and National Retail go up and down completely randomly.

Pair Corralation between SL Green and National Retail

Considering the 90-day investment horizon SL Green Realty is expected to generate 1.56 times more return on investment than National Retail. However, SL Green is 1.56 times more volatile than National Retail Properties. It trades about 0.19 of its potential returns per unit of risk. National Retail Properties is currently generating about -0.06 per unit of risk. If you would invest  6,392  in SL Green Realty on August 31, 2024 and sell it today you would earn a total of  1,493  from holding SL Green Realty or generate 23.36% return on investment over 90 days.

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

SL Green Realty  vs.  National Retail Properties

SL Green Realty

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SL Green Realty are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, SL Green reported solid returns over the last few months and may actually be approaching a breakup point.

National Retail Prop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Retail Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, National Retail is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with SL Green and National Retail

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

The idea behind SL Green Realty and National Retail Properties 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.