Correlation Between State Bank and Revolution Beauty
Can any of the company-specific risk be diversified away by investing in both State Bank and Revolution Beauty 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 Revolution Beauty 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 Revolution Beauty Group, you can compare the effects of market volatilities on State Bank and Revolution Beauty 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 Revolution Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Revolution Beauty.
Diversification Opportunities for State Bank and Revolution Beauty
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between State and Revolution is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Revolution Beauty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revolution Beauty 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 Revolution Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revolution Beauty has no effect on the direction of State Bank i.e., State Bank and Revolution Beauty go up and down completely randomly.
Pair Corralation between State Bank and Revolution Beauty
Assuming the 90 days trading horizon State Bank of is expected to generate 0.18 times more return on investment than Revolution Beauty. However, State Bank of is 5.44 times less risky than Revolution Beauty. It trades about -0.18 of its potential returns per unit of risk. Revolution Beauty Group is currently generating about -0.22 per unit of risk. If you would invest 9,320 in State Bank of on November 2, 2024 and sell it today you would lose (540.00) from holding State Bank of or give up 5.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
State Bank of vs. Revolution Beauty Group
Performance |
| Timeline |
| State Bank |
| Revolution Beauty |
State Bank and Revolution Beauty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Revolution Beauty
The main advantage of trading using opposite State Bank and Revolution Beauty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Revolution Beauty 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 Revolution Beauty will offset losses from the drop in Revolution Beauty's long position.| State Bank vs. Micron Technology | State Bank vs. Ubisoft Entertainment | State Bank vs. Pressure Technologies Plc | State Bank vs. Symphony Environmental Technologies |
| Revolution Beauty vs. SupplyMe Capital PLC | Revolution Beauty vs. SM Energy Co | Revolution Beauty vs. FuelCell Energy | Revolution Beauty vs. Grand Vision Media |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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