Correlation Between SL Green and 78490FA58

Can any of the company-specific risk be diversified away by investing in both SL Green and 78490FA58 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 78490FA58 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 US78490FA587, you can compare the effects of market volatilities on SL Green and 78490FA58 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 78490FA58. Check out your portfolio center. Please also check ongoing floating volatility patterns of SL Green and 78490FA58.

Diversification Opportunities for SL Green and 78490FA58

-0.06

Correlation Coefficient

SL Green  78490FA58

Good diversification

The 3 months correlation between SLG and 78490FA58 is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and US78490FA587 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US78490FA587 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 78490FA58. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US78490FA587 has no effect on the direction of SL Green i.e., SL Green and 78490FA58 go up and down completely randomly.

Pair Corralation between SL Green and 78490FA58

Considering the 90-day investment horizon SL Green Realty is expected to under-perform the 78490FA58. But the stock apears to be less risky and, when comparing its historical volatility, SL Green Realty is 1.93 times less risky than 78490FA58. The stock trades about -0.02 of its potential returns per unit of risk. The US78490FA587 is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  8,100  in US78490FA587 on September 29, 2024 and sell it today you would earn a total of  779.00  from holding US78490FA587 or generate 9.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	28.57%
Values	Daily Returns

SL Green Realty  vs.  US78490FA587

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.

US78490FA587

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in US78490FA587 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, 78490FA58 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SL Green and 78490FA58

The main advantage of trading using opposite SL Green and 78490FA58 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SL Green position performs unexpectedly, 78490FA58 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 78490FA58 will offset losses from the drop in 78490FA58's long position.

The idea behind SL Green Realty and US78490FA587 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.