Correlation Between Sound Financial and Absa Group
Can any of the company-specific risk be diversified away by investing in both Sound Financial and Absa Group 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 Sound Financial and Absa Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sound Financial Bancorp and Absa Group Limited, you can compare the effects of market volatilities on Sound Financial and Absa Group 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 Sound Financial with a short position of Absa Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sound Financial and Absa Group.
Diversification Opportunities for Sound Financial and Absa Group
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Sound and Absa is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sound Financial Bancorp and Absa Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absa Group Limited and Sound Financial 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 Sound Financial Bancorp are associated (or correlated) with Absa Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absa Group Limited has no effect on the direction of Sound Financial i.e., Sound Financial and Absa Group go up and down completely randomly.
Pair Corralation between Sound Financial and Absa Group
If you would invest 5,261 in Sound Financial Bancorp on October 30, 2024 and sell it today you would earn a total of 39.00 from holding Sound Financial Bancorp or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Sound Financial Bancorp vs. Absa Group Limited
Performance |
| Timeline |
| Sound Financial Bancorp |
| Absa Group Limited |
Sound Financial and Absa Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sound Financial and Absa Group
The main advantage of trading using opposite Sound Financial and Absa Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sound Financial position performs unexpectedly, Absa Group 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 Absa Group will offset losses from the drop in Absa Group's long position.| Sound Financial vs. Finward Bancorp | Sound Financial vs. Franklin Financial Services | Sound Financial vs. Community West Bancshares | Sound Financial vs. Home Federal Bancorp |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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