Correlation Between Freedom Bank and Sea
Can any of the company-specific risk be diversified away by investing in both Freedom Bank and Sea 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 Freedom Bank and Sea into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freedom Bank of and Sea, you can compare the effects of market volatilities on Freedom Bank and Sea 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 Freedom Bank with a short position of Sea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Bank and Sea.
Diversification Opportunities for Freedom Bank and Sea
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Freedom and Sea is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and Sea in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea and Freedom Bank 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 Freedom Bank of are associated (or correlated) with Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea has no effect on the direction of Freedom Bank i.e., Freedom Bank and Sea go up and down completely randomly.
Pair Corralation between Freedom Bank and Sea
Given the investment horizon of 90 days Freedom Bank is expected to generate 5.52 times less return on investment than Sea. But when comparing it to its historical volatility, Freedom Bank of is 2.47 times less risky than Sea. It trades about 0.08 of its potential returns per unit of risk. Sea is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 6,935 in Sea on August 31, 2024 and sell it today you would earn a total of 4,445 from holding Sea or generate 64.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Freedom Bank of vs. Sea
Performance |
| Timeline |
| Freedom Bank |
| Sea |
Freedom Bank and Sea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Freedom Bank and Sea
The main advantage of trading using opposite Freedom Bank and Sea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Bank position performs unexpectedly, Sea 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 Sea will offset losses from the drop in Sea's long position.| Freedom Bank vs. HUMANA INC | Freedom Bank vs. SCOR PK | Freedom Bank vs. Aquagold International | Freedom Bank vs. Thrivent High Yield |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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