Correlation Between Equifax and SGS SA
Can any of the company-specific risk be diversified away by investing in both Equifax and SGS 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 Equifax and SGS SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equifax and SGS SA, you can compare the effects of market volatilities on Equifax and SGS 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 Equifax with a short position of SGS SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equifax and SGS SA.
Diversification Opportunities for Equifax and SGS SA
Poor diversification
The 3 months correlation between Equifax and SGS is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Equifax and SGS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGS SA and Equifax 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 Equifax are associated (or correlated) with SGS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGS SA has no effect on the direction of Equifax i.e., Equifax and SGS SA go up and down completely randomly.
Pair Corralation between Equifax and SGS SA
Considering the 90-day investment horizon Equifax is expected to generate 1.34 times less return on investment than SGS SA. But when comparing it to its historical volatility, Equifax is 1.68 times less risky than SGS SA. It trades about 0.04 of its potential returns per unit of risk. SGS SA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 9,086 in SGS SA on August 24, 2024 and sell it today you would earn a total of 637.00 from holding SGS SA or generate 7.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equifax vs. SGS SA
Performance |
| Timeline |
| Equifax |
| SGS SA |
Equifax and SGS SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equifax and SGS SA
The main advantage of trading using opposite Equifax and SGS SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equifax position performs unexpectedly, SGS 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 SGS SA will offset losses from the drop in SGS SA's long position.| Equifax vs. Verisk Analytics | Equifax vs. Exponent | Equifax vs. FTI Consulting | Equifax vs. Franklin Covey |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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