Correlation Between Salient Select and Salient International
Can any of the company-specific risk be diversified away by investing in both Salient Select and Salient International 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 Select and Salient International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Salient Select Income and Salient International Real, you can compare the effects of market volatilities on Salient Select and Salient International 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 Select with a short position of Salient International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Salient Select and Salient International.
Diversification Opportunities for Salient Select and Salient International
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SALIENT and Salient is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Salient Select Income and Salient International Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient International and Salient Select 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 Select Income are associated (or correlated) with Salient International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient International has no effect on the direction of Salient Select i.e., Salient Select and Salient International go up and down completely randomly.
Pair Corralation between Salient Select and Salient International
Assuming the 90 days horizon Salient Select Income is expected to generate 0.62 times more return on investment than Salient International. However, Salient Select Income is 1.62 times less risky than Salient International. It trades about 0.08 of its potential returns per unit of risk. Salient International Real is currently generating about 0.03 per unit of risk. If you would invest 1,523 in Salient Select Income on August 30, 2024 and sell it today you would earn a total of 363.00 from holding Salient Select Income or generate 23.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Salient Select Income vs. Salient International Real
Performance |
| Timeline |
| Salient Select Income |
| Salient International |
Salient Select and Salient International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Salient Select and Salient International
The main advantage of trading using opposite Salient Select and Salient International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Salient Select position performs unexpectedly, Salient International 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 Salient International will offset losses from the drop in Salient International's long position.| Salient Select vs. Salient Select Income | Salient Select vs. Ivy High Income | Salient Select vs. Salient Select Income | Salient Select vs. Salient International Real |
| Salient International vs. HUMANA INC | Salient International vs. Aquagold International | Salient International vs. Barloworld Ltd ADR | Salient International vs. Morningstar Unconstrained Allocation |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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