Correlation Between SoftBank Group and Aberforth Smaller
Can any of the company-specific risk be diversified away by investing in both SoftBank Group and Aberforth Smaller 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 Aberforth Smaller 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 Aberforth Smaller Companies, you can compare the effects of market volatilities on SoftBank Group and Aberforth Smaller 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 Aberforth Smaller. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and Aberforth Smaller.
Diversification Opportunities for SoftBank Group and Aberforth Smaller
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SoftBank and Aberforth is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp and Aberforth Smaller Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aberforth Smaller 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 Aberforth Smaller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aberforth Smaller has no effect on the direction of SoftBank Group i.e., SoftBank Group and Aberforth Smaller go up and down completely randomly.
Pair Corralation between SoftBank Group and Aberforth Smaller
Assuming the 90 days trading horizon SoftBank Group Corp is expected to under-perform the Aberforth Smaller. In addition to that, SoftBank Group is 2.14 times more volatile than Aberforth Smaller Companies. It trades about -0.09 of its total potential returns per unit of risk. Aberforth Smaller Companies is currently generating about -0.07 per unit of volatility. If you would invest 148,000 in Aberforth Smaller Companies on September 2, 2024 and sell it today you would lose (2,400) from holding Aberforth Smaller Companies or give up 1.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 72.73% |
| Values | Daily Returns |
SoftBank Group Corp vs. Aberforth Smaller Companies
Performance |
| Timeline |
| SoftBank Group Corp |
| Aberforth Smaller |
SoftBank Group and Aberforth Smaller Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoftBank Group and Aberforth Smaller
The main advantage of trading using opposite SoftBank Group and Aberforth Smaller positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group position performs unexpectedly, Aberforth Smaller 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 Aberforth Smaller will offset losses from the drop in Aberforth Smaller'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 |
| Aberforth Smaller vs. Toyota Motor Corp | Aberforth Smaller vs. SoftBank Group Corp | Aberforth Smaller vs. OTP Bank Nyrt | Aberforth Smaller vs. Las Vegas Sands |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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