Correlation Between Salient Investment and SQ Old
Can any of the company-specific risk be diversified away by investing in both Salient Investment and SQ Old 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 Salient Investment and SQ Old into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salient Investment Grade and SQ Old, you can compare the effects of market volatilities on Salient Investment and SQ Old 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 Salient Investment with a short position of SQ Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salient Investment and SQ Old.
Diversification Opportunities for Salient Investment and SQ Old
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Salient and SQ Old is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Salient Investment Grade and SQ Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SQ Old and Salient Investment 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 Salient Investment Grade are associated (or correlated) with SQ Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SQ Old has no effect on the direction of Salient Investment i.e., Salient Investment and SQ Old go up and down completely randomly.
Pair Corralation between Salient Investment and SQ Old
Assuming the 90 days horizon Salient Investment Grade is expected to generate 0.75 times more return on investment than SQ Old. However, Salient Investment Grade is 1.33 times less risky than SQ Old. It trades about 0.07 of its potential returns per unit of risk. SQ Old is currently generating about 0.02 per unit of risk. If you would invest 1,313 in Salient Investment Grade on November 3, 2024 and sell it today you would earn a total of 40.00 from holding Salient Investment Grade or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 57.14% |
| Values | Daily Returns |
Salient Investment Grade vs. SQ Old
Performance |
| Timeline |
| Salient Investment Grade |
| SQ Old |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Salient Investment and SQ Old Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salient Investment and SQ Old
The main advantage of trading using opposite Salient Investment and SQ Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salient Investment position performs unexpectedly, SQ Old 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 SQ Old will offset losses from the drop in SQ Old's long position.| Salient Investment vs. Lord Abbett Health | Salient Investment vs. Highland Longshort Healthcare | Salient Investment vs. Tekla Healthcare Investors | Salient Investment vs. Baillie Gifford Health |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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