Correlation Between SoftBank Group and Public Service
Can any of the company-specific risk be diversified away by investing in both SoftBank Group and Public Service 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 SoftBank Group and Public Service into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SoftBank Group Corp and Public Service Enterprise, you can compare the effects of market volatilities on SoftBank Group and Public Service 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 SoftBank Group with a short position of Public Service. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and Public Service.
Diversification Opportunities for SoftBank Group and Public Service
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between SoftBank and Public is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp and Public Service Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Public Service Enterprise and SoftBank Group 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 SoftBank Group Corp are associated (or correlated) with Public Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Public Service Enterprise has no effect on the direction of SoftBank Group i.e., SoftBank Group and Public Service go up and down completely randomly.
Pair Corralation between SoftBank Group and Public Service
Assuming the 90 days trading horizon SoftBank Group Corp is expected to generate 2.15 times more return on investment than Public Service. However, SoftBank Group is 2.15 times more volatile than Public Service Enterprise. It trades about 0.05 of its potential returns per unit of risk. Public Service Enterprise is currently generating about 0.07 per unit of risk. If you would invest 555,735 in SoftBank Group Corp on September 23, 2024 and sell it today you would earn a total of 320,265 from holding SoftBank Group Corp or generate 57.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 84.74% |
| Values | Daily Returns |
SoftBank Group Corp vs. Public Service Enterprise
Performance |
| Timeline |
| SoftBank Group Corp |
| Public Service Enterprise |
SoftBank Group and Public Service Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoftBank Group and Public Service
The main advantage of trading using opposite SoftBank Group and Public Service positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group position performs unexpectedly, Public Service 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 Public Service will offset losses from the drop in Public Service's long position.| SoftBank Group vs. Pentair PLC | SoftBank Group vs. Finnair Oyj | SoftBank Group vs. Fair Oaks Income | SoftBank Group vs. Solstad Offshore ASA |
| Public Service vs. Uniper SE | Public Service vs. Mulberry Group PLC | Public Service vs. London Security Plc | Public Service vs. Triad Group PLC |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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