Correlation Between Sydbank and Metals Exploration
Can any of the company-specific risk be diversified away by investing in both Sydbank and Metals Exploration 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 Sydbank and Metals Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sydbank and Metals Exploration Plc, you can compare the effects of market volatilities on Sydbank and Metals Exploration 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 Sydbank with a short position of Metals Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sydbank and Metals Exploration.
Diversification Opportunities for Sydbank and Metals Exploration
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sydbank and Metals is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sydbank and Metals Exploration Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metals Exploration Plc and Sydbank 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 Sydbank are associated (or correlated) with Metals Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metals Exploration Plc has no effect on the direction of Sydbank i.e., Sydbank and Metals Exploration go up and down completely randomly.
Pair Corralation between Sydbank and Metals Exploration
Assuming the 90 days trading horizon Sydbank is expected to generate 0.46 times more return on investment than Metals Exploration. However, Sydbank is 2.15 times less risky than Metals Exploration. It trades about 0.22 of its potential returns per unit of risk. Metals Exploration Plc is currently generating about -0.19 per unit of risk. If you would invest 33,070 in Sydbank on September 2, 2024 and sell it today you would earn a total of 1,910 from holding Sydbank or generate 5.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sydbank vs. Metals Exploration Plc
Performance |
| Timeline |
| Sydbank |
| Metals Exploration Plc |
Sydbank and Metals Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sydbank and Metals Exploration
The main advantage of trading using opposite Sydbank and Metals Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sydbank position performs unexpectedly, Metals Exploration 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 Metals Exploration will offset losses from the drop in Metals Exploration's long position.| Sydbank vs. Uniper SE | Sydbank vs. Mulberry Group PLC | Sydbank vs. London Security Plc | Sydbank vs. Triad Group PLC |
| Metals Exploration vs. Bankers Investment Trust | Metals Exploration vs. New Residential Investment | Metals Exploration vs. Oakley Capital Investments | Metals Exploration vs. Sydbank |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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