Correlation Between Old Mutual and SLM Corp
Can any of the company-specific risk be diversified away by investing in both Old Mutual and SLM Corp 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 SLM Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Mutual and Sanlam, you can compare the effects of market volatilities on Old Mutual and SLM Corp 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 SLM Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Mutual and SLM Corp.
Diversification Opportunities for Old Mutual and SLM Corp
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Old and SLM is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Old Mutual and Sanlam in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLM Corp 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 SLM Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLM Corp has no effect on the direction of Old Mutual i.e., Old Mutual and SLM Corp go up and down completely randomly.
Pair Corralation between Old Mutual and SLM Corp
Assuming the 90 days trading horizon Old Mutual is expected to generate 1.17 times more return on investment than SLM Corp. However, Old Mutual is 1.17 times more volatile than Sanlam. It trades about 0.15 of its potential returns per unit of risk. Sanlam is currently generating about -0.06 per unit of risk. If you would invest 122,400 in Old Mutual on August 31, 2024 and sell it today you would earn a total of 4,600 from holding Old Mutual or generate 3.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Old Mutual vs. Sanlam
Performance |
| Timeline |
| Old Mutual |
| SLM Corp |
Old Mutual and SLM Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Mutual and SLM Corp
The main advantage of trading using opposite Old Mutual and SLM Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Mutual position performs unexpectedly, SLM Corp 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 SLM Corp will offset losses from the drop in SLM Corp's long position.| Old Mutual vs. Sanlam | Old Mutual vs. Discovery Holdings | Old Mutual vs. Sasol Ltd Bee | Old Mutual vs. Centaur Bci Balanced |
| SLM Corp vs. Bytes Technology | SLM Corp vs. Hosken Consolidated Investments | SLM Corp vs. Master Drilling Group | SLM Corp vs. Datatec |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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