Correlation Between Vornado Realty and SL Green

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

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

Diversification Opportunities for Vornado Realty and SL Green

0.34

Correlation Coefficient

Vornado Realty  SL Green

Weak diversification

The 3 months correlation between Vornado and SLG-PI is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Vornado Realty Trust 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 Vornado Realty 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 Vornado Realty Trust 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 Vornado Realty i.e., Vornado Realty and SL Green go up and down completely randomly.

Pair Corralation between Vornado Realty and SL Green

Assuming the 90 days trading horizon Vornado Realty is expected to generate 1.64 times less return on investment than SL Green. But when comparing it to its historical volatility, Vornado Realty Trust is 1.38 times less risky than SL Green. It trades about 0.07 of its potential returns per unit of risk. SL Green Realty is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,386  in SL Green Realty on September 14, 2024 and sell it today you would earn a total of  34.00  from holding SL Green Realty or generate 1.42% return on investment over 90 days.

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

Vornado Realty Trust  vs.  SL Green Realty

Vornado Realty Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vornado Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Vornado Realty is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

SL Green Realty

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SL Green Realty are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical and fundamental indicators, SL Green is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Vornado Realty and SL Green

The main advantage of trading using opposite Vornado Realty and SL Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vornado Realty 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 Vornado Realty Trust 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.