Correlation Between Old Mutual and Sabvest Capital
Can any of the company-specific risk be diversified away by investing in both Old Mutual and Sabvest Capital 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 Old Mutual and Sabvest Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Mutual and Sabvest Capital, you can compare the effects of market volatilities on Old Mutual and Sabvest Capital 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 Old Mutual with a short position of Sabvest Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Mutual and Sabvest Capital.
Diversification Opportunities for Old Mutual and Sabvest Capital
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Old and Sabvest is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Old Mutual and Sabvest Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabvest Capital and Old Mutual 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 Old Mutual are associated (or correlated) with Sabvest Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabvest Capital has no effect on the direction of Old Mutual i.e., Old Mutual and Sabvest Capital go up and down completely randomly.
Pair Corralation between Old Mutual and Sabvest Capital
Assuming the 90 days trading horizon Old Mutual is expected to generate 1.94 times less return on investment than Sabvest Capital. But when comparing it to its historical volatility, Old Mutual is 1.44 times less risky than Sabvest Capital. It trades about 0.1 of its potential returns per unit of risk. Sabvest Capital is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 662,892 in Sabvest Capital on September 2, 2024 and sell it today you would earn a total of 282,108 from holding Sabvest Capital or generate 42.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Old Mutual vs. Sabvest Capital
Performance |
| Timeline |
| Old Mutual |
| Sabvest Capital |
Old Mutual and Sabvest Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Mutual and Sabvest Capital
The main advantage of trading using opposite Old Mutual and Sabvest Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Mutual position performs unexpectedly, Sabvest Capital 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 Sabvest Capital will offset losses from the drop in Sabvest Capital's long position.| Old Mutual vs. Sanlam | Old Mutual vs. Sasol Ltd Bee | Old Mutual vs. Centaur Bci Balanced | Old Mutual vs. Sabvest Capital |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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