Correlation Between SoftBank Group and Pan American
Can any of the company-specific risk be diversified away by investing in both SoftBank Group and Pan American 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 Pan American 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 Pan American Silver, you can compare the effects of market volatilities on SoftBank Group and Pan American 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 Pan American. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and Pan American.
Diversification Opportunities for SoftBank Group and Pan American
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SoftBank and Pan is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp and Pan American Silver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pan American Silver 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 Pan American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pan American Silver has no effect on the direction of SoftBank Group i.e., SoftBank Group and Pan American go up and down completely randomly.
Pair Corralation between SoftBank Group and Pan American
Assuming the 90 days trading horizon SoftBank Group Corp is expected to generate 2.13 times more return on investment than Pan American. However, SoftBank Group is 2.13 times more volatile than Pan American Silver. It trades about 0.29 of its potential returns per unit of risk. Pan American Silver is currently generating about 0.22 per unit of risk. If you would invest 918,500 in SoftBank Group Corp on October 25, 2024 and sell it today you would earn a total of 94,000 from holding SoftBank Group Corp or generate 10.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 57.89% |
| Values | Daily Returns |
SoftBank Group Corp vs. Pan American Silver
Performance |
| Timeline |
| SoftBank Group Corp |
| Pan American Silver |
SoftBank Group and Pan American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoftBank Group and Pan American
The main advantage of trading using opposite SoftBank Group and Pan American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group position performs unexpectedly, Pan American 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 Pan American will offset losses from the drop in Pan American's long position.| SoftBank Group vs. PPHE Hotel Group | SoftBank Group vs. Spotify Technology SA | SoftBank Group vs. British American Tobacco | SoftBank Group vs. DXC Technology Co |
| Pan American vs. Toyota Motor Corp | Pan American vs. SoftBank Group Corp | Pan American vs. OTP Bank Nyrt | Pan American vs. ONEOK Inc |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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