Correlation Between Agree Realty and SL Green

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

Diversification Opportunities for Agree Realty and SL Green

-0.51

Correlation Coefficient

Agree Realty  SL Green

Excellent diversification

The 3 months correlation between Agree and SLG is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Agree Realty 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 Agree 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 Agree Realty 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 Agree Realty i.e., Agree Realty and SL Green go up and down completely randomly.

Pair Corralation between Agree Realty and SL Green

Assuming the 90 days trading horizon Agree Realty is expected to under-perform the SL Green. But the preferred stock apears to be less risky and, when comparing its historical volatility, Agree Realty is 3.08 times less risky than SL Green. The preferred stock trades about -0.12 of its potential returns per unit of risk. The SL Green Realty is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  5,091  in SL Green Realty on February 4, 2024 and sell it today you would earn a total of  56.00  from holding SL Green Realty or generate 1.1% return on investment over 90 days.

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

Agree Realty  vs.  SL Green Realty

Agree Realty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agree Realty has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Agree Realty is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

SL Green Realty

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SL Green Realty are ranked lower than 9 (%) 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.

Pair Trading with Agree Realty and SL Green

The main advantage of trading using opposite Agree Realty and SL Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agree 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 Agree Realty 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.