Correlation Between SoftBank Group and Gfinity PLC
Can any of the company-specific risk be diversified away by investing in both SoftBank Group and Gfinity PLC 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 Gfinity PLC 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 Gfinity PLC, you can compare the effects of market volatilities on SoftBank Group and Gfinity PLC 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 Gfinity PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and Gfinity PLC.
Diversification Opportunities for SoftBank Group and Gfinity PLC
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SoftBank and Gfinity is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp and Gfinity PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gfinity PLC 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 Gfinity PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gfinity PLC has no effect on the direction of SoftBank Group i.e., SoftBank Group and Gfinity PLC go up and down completely randomly.
Pair Corralation between SoftBank Group and Gfinity PLC
Assuming the 90 days trading horizon SoftBank Group Corp is expected to generate 0.31 times more return on investment than Gfinity PLC. However, SoftBank Group Corp is 3.24 times less risky than Gfinity PLC. It trades about 0.06 of its potential returns per unit of risk. Gfinity PLC is currently generating about -0.02 per unit of risk. If you would invest 555,735 in SoftBank Group Corp on September 13, 2024 and sell it today you would earn a total of 365,565 from holding SoftBank Group Corp or generate 65.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 81.49% |
| Values | Daily Returns |
SoftBank Group Corp vs. Gfinity PLC
Performance |
| Timeline |
| SoftBank Group Corp |
| Gfinity PLC |
SoftBank Group and Gfinity PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoftBank Group and Gfinity PLC
The main advantage of trading using opposite SoftBank Group and Gfinity PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group position performs unexpectedly, Gfinity PLC 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 Gfinity PLC will offset losses from the drop in Gfinity PLC's long position.| SoftBank Group vs. Intuitive Investments Group | SoftBank Group vs. PureTech Health plc | SoftBank Group vs. Oakley Capital Investments | SoftBank Group vs. CVS Health Corp |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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