Correlation Between Granite 3x and SQLI SA
Can any of the company-specific risk be diversified away by investing in both Granite 3x and SQLI SA 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 Granite 3x and SQLI SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Granite 3x LVMH and SQLI SA, you can compare the effects of market volatilities on Granite 3x and SQLI SA 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 Granite 3x with a short position of SQLI SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Granite 3x and SQLI SA.
Diversification Opportunities for Granite 3x and SQLI SA
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Granite and SQLI is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Granite 3x LVMH and SQLI SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SQLI SA and Granite 3x 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 Granite 3x LVMH are associated (or correlated) with SQLI SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SQLI SA has no effect on the direction of Granite 3x i.e., Granite 3x and SQLI SA go up and down completely randomly.
Pair Corralation between Granite 3x and SQLI SA
Assuming the 90 days trading horizon Granite 3x LVMH is expected to under-perform the SQLI SA. In addition to that, Granite 3x is 15.6 times more volatile than SQLI SA. It trades about -0.2 of its total potential returns per unit of risk. SQLI SA is currently generating about 0.12 per unit of volatility. If you would invest 5,350 in SQLI SA on August 25, 2024 and sell it today you would earn a total of 50.00 from holding SQLI SA or generate 0.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Granite 3x LVMH vs. SQLI SA
Performance |
| Timeline |
| Granite 3x LVMH |
| SQLI SA |
Granite 3x and SQLI SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Granite 3x and SQLI SA
The main advantage of trading using opposite Granite 3x and SQLI SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Granite 3x position performs unexpectedly, SQLI SA 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 SQLI SA will offset losses from the drop in SQLI SA's long position.The idea behind Granite 3x LVMH and SQLI SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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