Correlation Between SoftBank Group and Revolution Beauty
Can any of the company-specific risk be diversified away by investing in both SoftBank Group and Revolution Beauty 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 Revolution Beauty 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 Revolution Beauty Group, you can compare the effects of market volatilities on SoftBank Group and Revolution Beauty 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 Revolution Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of SoftBank Group and Revolution Beauty.
Diversification Opportunities for SoftBank Group and Revolution Beauty
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SoftBank and Revolution is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding SoftBank Group Corp and Revolution Beauty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revolution Beauty 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 Revolution Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revolution Beauty has no effect on the direction of SoftBank Group i.e., SoftBank Group and Revolution Beauty go up and down completely randomly.
Pair Corralation between SoftBank Group and Revolution Beauty
Assuming the 90 days trading horizon SoftBank Group Corp is expected to generate 0.8 times more return on investment than Revolution Beauty. However, SoftBank Group Corp is 1.25 times less risky than Revolution Beauty. It trades about 0.07 of its potential returns per unit of risk. Revolution Beauty Group is currently generating about -0.01 per unit of risk. If you would invest 608,605 in SoftBank Group Corp on September 24, 2024 and sell it today you would earn a total of 267,395 from holding SoftBank Group Corp or generate 43.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 76.11% |
| Values | Daily Returns |
SoftBank Group Corp vs. Revolution Beauty Group
Performance |
| Timeline |
| SoftBank Group Corp |
| Revolution Beauty |
SoftBank Group and Revolution Beauty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SoftBank Group and Revolution Beauty
The main advantage of trading using opposite SoftBank Group and Revolution Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SoftBank Group position performs unexpectedly, Revolution Beauty 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 Revolution Beauty will offset losses from the drop in Revolution Beauty's long position.| SoftBank Group vs. Roebuck Food Group | SoftBank Group vs. Grand Vision Media | SoftBank Group vs. Everyman Media Group | SoftBank Group vs. Travel Leisure Co |
| Revolution Beauty vs. Toyota Motor Corp | Revolution Beauty vs. SoftBank Group Corp | Revolution Beauty vs. OTP Bank Nyrt | Revolution Beauty vs. Newmont Corp |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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