Correlation Between SL Green and Amana Developing

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

Diversification Opportunities for SL Green and Amana Developing

0.72

Correlation Coefficient

SL Green  Amana Developing

Poor diversification

The 3 months correlation between SLG and Amana is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SL Green Realty and Amana Developing World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amana Developing World 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 Amana Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amana Developing World has no effect on the direction of SL Green i.e., SL Green and Amana Developing go up and down completely randomly.

Pair Corralation between SL Green and Amana Developing

Considering the 90-day investment horizon SL Green Realty is expected to under-perform the Amana Developing. In addition to that, SL Green is 3.55 times more volatile than Amana Developing World. It trades about -0.13 of its total potential returns per unit of risk. Amana Developing World is currently generating about -0.18 per unit of volatility. If you would invest  1,315  in Amana Developing World on January 28, 2024 and sell it today you would lose (40.00) from holding Amana Developing World or give up 3.04% of portfolio value over 90 days.

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

SL Green Realty  vs.  Amana Developing World

SL Green Realty

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SL Green Realty are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady essential indicators, SL Green may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Amana Developing World

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Amana Developing World are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Amana Developing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SL Green and Amana Developing

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

The idea behind SL Green Realty and Amana Developing World 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..