Correlation Between Science Applications and Southern
Can any of the company-specific risk be diversified away by investing in both Science Applications and Southern 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 Science Applications and Southern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Science Applications International and The Southern, you can compare the effects of market volatilities on Science Applications and Southern 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 Science Applications with a short position of Southern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science Applications and Southern.
Diversification Opportunities for Science Applications and Southern
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Science and Southern is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Science Applications Internati and The Southern in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern and Science Applications 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 Science Applications International are associated (or correlated) with Southern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern has no effect on the direction of Science Applications i.e., Science Applications and Southern go up and down completely randomly.
Pair Corralation between Science Applications and Southern
Assuming the 90 days trading horizon Science Applications International is expected to under-perform the Southern. In addition to that, Science Applications is 4.38 times more volatile than The Southern. It trades about -0.3 of its total potential returns per unit of risk. The Southern is currently generating about -0.15 per unit of volatility. If you would invest 8,184 in The Southern on September 14, 2024 and sell it today you would lose (238.00) from holding The Southern or give up 2.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Science Applications Internati vs. The Southern
Performance |
| Timeline |
| Science Applications |
| Southern |
Science Applications and Southern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Science Applications and Southern
The main advantage of trading using opposite Science Applications and Southern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science Applications position performs unexpectedly, Southern 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 Southern will offset losses from the drop in Southern's long position.| Science Applications vs. PSI Software AG | Science Applications vs. Universal Display | Science Applications vs. JD SPORTS FASH | Science Applications vs. Constellation Software |
| Southern vs. Zijin Mining Group | Southern vs. Hitachi Construction Machinery | Southern vs. MCEWEN MINING INC | Southern vs. HYDROFARM HLD GRP |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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