Correlation Between SFL and Triad Business
Can any of the company-specific risk be diversified away by investing in both SFL and Triad Business 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 SFL and Triad Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SFL Corporation and Triad Business Bank, you can compare the effects of market volatilities on SFL and Triad Business 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 SFL with a short position of Triad Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of SFL and Triad Business.
Diversification Opportunities for SFL and Triad Business
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SFL and Triad is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding SFL Corp. and Triad Business Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triad Business Bank and SFL 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 SFL Corporation are associated (or correlated) with Triad Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triad Business Bank has no effect on the direction of SFL i.e., SFL and Triad Business go up and down completely randomly.
Pair Corralation between SFL and Triad Business
Considering the 90-day investment horizon SFL Corporation is expected to generate 1.27 times more return on investment than Triad Business. However, SFL is 1.27 times more volatile than Triad Business Bank. It trades about -0.08 of its potential returns per unit of risk. Triad Business Bank is currently generating about -0.13 per unit of risk. If you would invest 1,025 in SFL Corporation on September 15, 2024 and sell it today you would lose (27.00) from holding SFL Corporation or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
SFL Corp. vs. Triad Business Bank
Performance |
| Timeline |
| SFL Corporation |
| Triad Business Bank |
SFL and Triad Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SFL and Triad Business
The main advantage of trading using opposite SFL and Triad Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SFL position performs unexpectedly, Triad Business 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 Triad Business will offset losses from the drop in Triad Business' long position.The idea behind SFL Corporation and Triad Business Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Triad Business vs. PT Bank Rakyat | Triad Business vs. Morningstar Unconstrained Allocation | Triad Business vs. Bondbloxx ETF Trust | Triad Business vs. Spring Valley Acquisition |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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