Correlation Between SoftBank Group and 3I Group
Can any of the company-specific risk be diversified away by investing in both SoftBank Group and 3I Group 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 3I Group 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 3I Group PLC, you can compare the effects of market volatilities on SoftBank Group and 3I Group 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 3I Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and 3I Group.
Diversification Opportunities for SoftBank Group and 3I Group
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SoftBank and III is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp and 3I Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 3I Group 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 3I Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 3I Group PLC has no effect on the direction of SoftBank Group i.e., SoftBank Group and 3I Group go up and down completely randomly.
Pair Corralation between SoftBank Group and 3I Group
Assuming the 90 days trading horizon SoftBank Group is expected to generate 2.72 times less return on investment than 3I Group. In addition to that, SoftBank Group is 4.29 times more volatile than 3I Group PLC. It trades about 0.02 of its total potential returns per unit of risk. 3I Group PLC is currently generating about 0.27 per unit of volatility. If you would invest 362,000 in 3I Group PLC on November 2, 2024 and sell it today you would earn a total of 24,100 from holding 3I Group PLC or generate 6.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 68.18% |
| Values | Daily Returns |
SoftBank Group Corp vs. 3I Group PLC
Performance |
| Timeline |
| SoftBank Group Corp |
| 3I Group PLC |
SoftBank Group and 3I Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoftBank Group and 3I Group
The main advantage of trading using opposite SoftBank Group and 3I Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group position performs unexpectedly, 3I Group 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 3I Group will offset losses from the drop in 3I Group's long position.| SoftBank Group vs. China Pacific Insurance | SoftBank Group vs. Playtech Plc | SoftBank Group vs. Bytes Technology | SoftBank Group vs. Take Two Interactive Software |
| 3I Group vs. Iron Mountain | 3I Group vs. JLEN Environmental Assets | 3I Group vs. AMG Advanced Metallurgical | 3I Group vs. GreenX Metals |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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