Correlation Between LXP Industrial and Empire State
Can any of the company-specific risk be diversified away by investing in both LXP Industrial and Empire State 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 LXP Industrial and Empire State into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LXP Industrial Trust and Empire State Realty, you can compare the effects of market volatilities on LXP Industrial and Empire State 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 LXP Industrial with a short position of Empire State. Check out your portfolio center. Please also check ongoing floating volatility patterns of LXP Industrial and Empire State.
Diversification Opportunities for LXP Industrial and Empire State
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between LXP and Empire is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding LXP Industrial Trust and Empire State Realty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empire State Realty and LXP Industrial 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 LXP Industrial Trust are associated (or correlated) with Empire State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empire State Realty has no effect on the direction of LXP Industrial i.e., LXP Industrial and Empire State go up and down completely randomly.
Pair Corralation between LXP Industrial and Empire State
Considering the 90-day investment horizon LXP Industrial is expected to generate 2.83 times less return on investment than Empire State. But when comparing it to its historical volatility, LXP Industrial Trust is 1.46 times less risky than Empire State. It trades about 0.03 of its potential returns per unit of risk. Empire State Realty is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 635.00 in Empire State Realty on June 23, 2024 and sell it today you would earn a total of 466.00 from holding Empire State Realty or generate 73.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
LXP Industrial Trust vs. Empire State Realty
Performance |
Timeline |
LXP Industrial Trust |
Empire State Realty |
LXP Industrial and Empire State Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with LXP Industrial and Empire State
The main advantage of trading using opposite LXP Industrial and Empire State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LXP Industrial position performs unexpectedly, Empire State 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 Empire State will offset losses from the drop in Empire State's long position.LXP Industrial vs. Boston Properties | LXP Industrial vs. Kilroy Realty Corp | LXP Industrial vs. Alexandria Real Estate | LXP Industrial vs. Vornado Realty Trust |
Empire State vs. Paramount Group | Empire State vs. Hudson Pacific Properties | Empire State vs. Equity Commonwealth | Empire State vs. Douglas Emmett |
Check out your portfolio center.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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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