Correlation Between Paragon Banking and Hoist Finance
Can any of the company-specific risk be diversified away by investing in both Paragon Banking and Hoist Finance 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 Paragon Banking and Hoist Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paragon Banking Group and Hoist Finance AB, you can compare the effects of market volatilities on Paragon Banking and Hoist Finance 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 Paragon Banking with a short position of Hoist Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paragon Banking and Hoist Finance.
Diversification Opportunities for Paragon Banking and Hoist Finance
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Paragon and Hoist is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Paragon Banking Group and Hoist Finance AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoist Finance AB and Paragon Banking 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 Paragon Banking Group are associated (or correlated) with Hoist Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoist Finance AB has no effect on the direction of Paragon Banking i.e., Paragon Banking and Hoist Finance go up and down completely randomly.
Pair Corralation between Paragon Banking and Hoist Finance
Assuming the 90 days trading horizon Paragon Banking is expected to generate 2.52 times less return on investment than Hoist Finance. But when comparing it to its historical volatility, Paragon Banking Group is 1.72 times less risky than Hoist Finance. It trades about 0.09 of its potential returns per unit of risk. Hoist Finance AB is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 230.00 in Hoist Finance AB on September 26, 2024 and sell it today you would earn a total of 554.00 from holding Hoist Finance AB or generate 240.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paragon Banking Group vs. Hoist Finance AB
Performance |
| Timeline |
| Paragon Banking Group |
| Hoist Finance AB |
Paragon Banking and Hoist Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paragon Banking and Hoist Finance
The main advantage of trading using opposite Paragon Banking and Hoist Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paragon Banking position performs unexpectedly, Hoist Finance 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 Hoist Finance will offset losses from the drop in Hoist Finance's long position.| Paragon Banking vs. Far East Horizon | Paragon Banking vs. Walker Dunlop | Paragon Banking vs. Hercules Capital | Paragon Banking vs. DIVERSIFIED ROYALTY |
| Hoist Finance vs. Far East Horizon | Hoist Finance vs. Walker Dunlop | Hoist Finance vs. Paragon Banking Group | Hoist Finance vs. Hercules Capital |
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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