Correlation Between SoftBank Group and LifeSafe Holdings
Can any of the company-specific risk be diversified away by investing in both SoftBank Group and LifeSafe Holdings 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 LifeSafe Holdings 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 LifeSafe Holdings PLC, you can compare the effects of market volatilities on SoftBank Group and LifeSafe Holdings 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 LifeSafe Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and LifeSafe Holdings.
Diversification Opportunities for SoftBank Group and LifeSafe Holdings
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SoftBank and LifeSafe is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp and LifeSafe Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LifeSafe Holdings 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 LifeSafe Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LifeSafe Holdings PLC has no effect on the direction of SoftBank Group i.e., SoftBank Group and LifeSafe Holdings go up and down completely randomly.
Pair Corralation between SoftBank Group and LifeSafe Holdings
Assuming the 90 days trading horizon SoftBank Group Corp is expected to generate 0.91 times more return on investment than LifeSafe Holdings. However, SoftBank Group Corp is 1.1 times less risky than LifeSafe Holdings. It trades about -0.1 of its potential returns per unit of risk. LifeSafe Holdings PLC is currently generating about -0.28 per unit of risk. If you would invest 951,300 in SoftBank Group Corp on September 12, 2024 and sell it today you would lose (30,000) from holding SoftBank Group Corp or give up 3.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 73.91% |
| Values | Daily Returns |
SoftBank Group Corp vs. LifeSafe Holdings PLC
Performance |
| Timeline |
| SoftBank Group Corp |
| LifeSafe Holdings PLC |
SoftBank Group and LifeSafe Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoftBank Group and LifeSafe Holdings
The main advantage of trading using opposite SoftBank Group and LifeSafe Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group position performs unexpectedly, LifeSafe Holdings 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 LifeSafe Holdings will offset losses from the drop in LifeSafe Holdings' long position.| SoftBank Group vs. Toyota Motor Corp | SoftBank Group vs. OTP Bank Nyrt | SoftBank Group vs. Hershey Co | SoftBank Group vs. Humana Inc |
| LifeSafe Holdings vs. Impax Environmental Markets | LifeSafe Holdings vs. Compal Electronics GDR | LifeSafe Holdings vs. Gaming Realms plc | LifeSafe Holdings vs. Verizon Communications |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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