Correlation Between Safe and Financial
Can any of the company-specific risk be diversified away by investing in both Safe and Financial 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 Safe and Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safe and Green and Financial 15 Split, you can compare the effects of market volatilities on Safe and Financial 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 Safe with a short position of Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safe and Financial.
Diversification Opportunities for Safe and Financial
Pay attention - limited upside
The 3 months correlation between Safe and Financial is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Safe and Green and Financial 15 Split in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial 15 Split and Safe 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 Safe and Green are associated (or correlated) with Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial 15 Split has no effect on the direction of Safe i.e., Safe and Financial go up and down completely randomly.
Pair Corralation between Safe and Financial
Considering the 90-day investment horizon Safe is expected to generate 1.62 times less return on investment than Financial. In addition to that, Safe is 2.81 times more volatile than Financial 15 Split. It trades about 0.01 of its total potential returns per unit of risk. Financial 15 Split is currently generating about 0.07 per unit of volatility. If you would invest 486.00 in Financial 15 Split on August 30, 2024 and sell it today you would earn a total of 242.00 from holding Financial 15 Split or generate 49.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.24% |
| Values | Daily Returns |
Safe and Green vs. Financial 15 Split
Performance |
| Timeline |
| Safe and Green |
| Financial 15 Split |
Safe and Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safe and Financial
The main advantage of trading using opposite Safe and Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safe position performs unexpectedly, Financial 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 Financial will offset losses from the drop in Financial's long position.| Safe vs. Sun Hung Kai | Safe vs. Bayport International Holdings | Safe vs. Landsea Homes Corp | Safe vs. Sino Land Co |
| Financial vs. Invesco High Income | Financial vs. Blackrock Muniholdings Ny | Financial vs. Nuveen California Select | Financial vs. MFS Investment Grade |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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