Correlation Between Bank Of and SLR Investment
Can any of the company-specific risk be diversified away by investing in both Bank Of and SLR Investment 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 Bank Of and SLR Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Bank of and SLR Investment Corp, you can compare the effects of market volatilities on Bank Of and SLR Investment 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 Bank Of with a short position of SLR Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Of and SLR Investment.
Diversification Opportunities for Bank Of and SLR Investment
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and SLR is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding The Bank of and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp and Bank Of 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 The Bank of are associated (or correlated) with SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of Bank Of i.e., Bank Of and SLR Investment go up and down completely randomly.
Pair Corralation between Bank Of and SLR Investment
Assuming the 90 days horizon The Bank of is expected to generate 1.12 times more return on investment than SLR Investment. However, Bank Of is 1.12 times more volatile than SLR Investment Corp. It trades about 0.18 of its potential returns per unit of risk. SLR Investment Corp is currently generating about 0.1 per unit of risk. If you would invest 5,931 in The Bank of on October 26, 2024 and sell it today you would earn a total of 2,124 from holding The Bank of or generate 35.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Bank of vs. SLR Investment Corp
Performance |
| Timeline |
| The Bank |
| SLR Investment Corp |
Bank Of and SLR Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Of and SLR Investment
The main advantage of trading using opposite Bank Of and SLR Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Of position performs unexpectedly, SLR Investment 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 SLR Investment will offset losses from the drop in SLR Investment's long position.| Bank Of vs. FIRST SHIP LEASE | Bank Of vs. Chesapeake Utilities | Bank Of vs. Canadian Utilities Limited | Bank Of vs. GREENX METALS LTD |
| SLR Investment vs. Blackstone Group | SLR Investment vs. The Bank of | SLR Investment vs. Ameriprise Financial | SLR Investment vs. State Street |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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