Correlation Between Fair Oaks and SoftBank Group
Can any of the company-specific risk be diversified away by investing in both Fair Oaks and SoftBank Group 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 Fair Oaks and SoftBank Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fair Oaks Income and SoftBank Group Corp, you can compare the effects of market volatilities on Fair Oaks and SoftBank Group 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 Fair Oaks with a short position of SoftBank Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Oaks and SoftBank Group.
Diversification Opportunities for Fair Oaks and SoftBank Group
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fair and SoftBank is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Fair Oaks Income and SoftBank Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoftBank Group Corp and Fair Oaks 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 Fair Oaks Income are associated (or correlated) with SoftBank Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoftBank Group Corp has no effect on the direction of Fair Oaks i.e., Fair Oaks and SoftBank Group go up and down completely randomly.
Pair Corralation between Fair Oaks and SoftBank Group
Assuming the 90 days trading horizon Fair Oaks is expected to generate 2.3 times less return on investment than SoftBank Group. But when comparing it to its historical volatility, Fair Oaks Income is 3.71 times less risky than SoftBank Group. It trades about 0.09 of its potential returns per unit of risk. SoftBank Group Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 555,735 in SoftBank Group Corp on September 23, 2024 and sell it today you would earn a total of 320,265 from holding SoftBank Group Corp or generate 57.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 82.2% |
| Values | Daily Returns |
Fair Oaks Income vs. SoftBank Group Corp
Performance |
| Timeline |
| Fair Oaks Income |
| SoftBank Group Corp |
Fair Oaks and SoftBank Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fair Oaks and SoftBank Group
The main advantage of trading using opposite Fair Oaks and SoftBank Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fair Oaks position performs unexpectedly, SoftBank Group 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 SoftBank Group will offset losses from the drop in SoftBank Group's long position.| Fair Oaks vs. Toyota Motor Corp | Fair Oaks vs. SoftBank Group Corp | Fair Oaks vs. OTP Bank Nyrt | Fair Oaks vs. Freeport McMoRan |
| SoftBank Group vs. Pentair PLC | SoftBank Group vs. Finnair Oyj | SoftBank Group vs. Fair Oaks Income | SoftBank Group vs. Solstad Offshore ASA |
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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