Correlation Between SoftBank Group and GoldMining
Can any of the company-specific risk be diversified away by investing in both SoftBank Group and GoldMining 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 GoldMining 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 GoldMining, you can compare the effects of market volatilities on SoftBank Group and GoldMining 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 GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and GoldMining.
Diversification Opportunities for SoftBank Group and GoldMining
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SoftBank and GoldMining is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining 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 GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of SoftBank Group i.e., SoftBank Group and GoldMining go up and down completely randomly.
Pair Corralation between SoftBank Group and GoldMining
Assuming the 90 days trading horizon SoftBank Group Corp is expected to generate 1.05 times more return on investment than GoldMining. However, SoftBank Group is 1.05 times more volatile than GoldMining. It trades about 0.05 of its potential returns per unit of risk. GoldMining is currently generating about 0.02 per unit of risk. If you would invest 841,213 in SoftBank Group Corp on September 2, 2024 and sell it today you would earn a total of 36,787 from holding SoftBank Group Corp or generate 4.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.56% |
| Values | Daily Returns |
SoftBank Group Corp vs. GoldMining
Performance |
| Timeline |
| SoftBank Group Corp |
| GoldMining |
SoftBank Group and GoldMining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoftBank Group and GoldMining
The main advantage of trading using opposite SoftBank Group and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.| SoftBank Group vs. Toyota Motor Corp | SoftBank Group vs. OTP Bank Nyrt | SoftBank Group vs. Las Vegas Sands | SoftBank Group vs. Yum Brands |
| GoldMining vs. European Metals Holdings | GoldMining vs. Cornish Metals | GoldMining vs. Virgin Wines UK | GoldMining vs. Gaztransport et Technigaz |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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