Correlation Between State Bank and Hershey
Can any of the company-specific risk be diversified away by investing in both State Bank and Hershey 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 State Bank and Hershey into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Bank of and Hershey Co, you can compare the effects of market volatilities on State Bank and Hershey 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 State Bank with a short position of Hershey. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Hershey.
Diversification Opportunities for State Bank and Hershey
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between State and Hershey is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Hershey Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hershey and State 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 State Bank of are associated (or correlated) with Hershey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hershey has no effect on the direction of State Bank i.e., State Bank and Hershey go up and down completely randomly.
Pair Corralation between State Bank and Hershey
Assuming the 90 days trading horizon State Bank of is expected to generate 1.18 times more return on investment than Hershey. However, State Bank is 1.18 times more volatile than Hershey Co. It trades about 0.05 of its potential returns per unit of risk. Hershey Co is currently generating about -0.06 per unit of risk. If you would invest 6,245 in State Bank of on November 7, 2024 and sell it today you would earn a total of 2,665 from holding State Bank of or generate 42.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.79% |
| Values | Daily Returns |
State Bank of vs. Hershey Co
Performance |
| Timeline |
| State Bank |
| Hershey |
State Bank and Hershey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Hershey
The main advantage of trading using opposite State Bank and Hershey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Hershey 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 Hershey will offset losses from the drop in Hershey's long position.| State Bank vs. Roadside Real Estate | State Bank vs. Broadcom | State Bank vs. Commerzbank AG | State Bank vs. Gear4music Plc |
| Hershey vs. Public Storage | Hershey vs. Telecom Italia SpA | Hershey vs. Spirent Communications plc | Hershey vs. Aeorema Communications Plc |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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