Correlation Between State Bank and ARCHER-DANIELS MID
Can any of the company-specific risk be diversified away by investing in both State Bank and ARCHER-DANIELS MID 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 ARCHER-DANIELS MID 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 ARCHER DANIELS MID, you can compare the effects of market volatilities on State Bank and ARCHER-DANIELS MID 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 ARCHER-DANIELS MID. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and ARCHER-DANIELS MID.
Diversification Opportunities for State Bank and ARCHER-DANIELS MID
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between State and ARCHER-DANIELS is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and ARCHER DANIELS MID in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARCHER DANIELS MID 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 ARCHER-DANIELS MID. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARCHER DANIELS MID has no effect on the direction of State Bank i.e., State Bank and ARCHER-DANIELS MID go up and down completely randomly.
Pair Corralation between State Bank and ARCHER-DANIELS MID
Assuming the 90 days horizon State Bank of is expected to generate 1.11 times more return on investment than ARCHER-DANIELS MID. However, State Bank is 1.11 times more volatile than ARCHER DANIELS MID. It trades about 0.05 of its potential returns per unit of risk. ARCHER DANIELS MID is currently generating about -0.04 per unit of risk. If you would invest 8,800 in State Bank of on September 2, 2024 and sell it today you would earn a total of 450.00 from holding State Bank of or generate 5.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. ARCHER DANIELS MID
Performance |
| Timeline |
| State Bank |
| ARCHER DANIELS MID |
State Bank and ARCHER-DANIELS MID Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and ARCHER-DANIELS MID
The main advantage of trading using opposite State Bank and ARCHER-DANIELS MID positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, ARCHER-DANIELS MID 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 ARCHER-DANIELS MID will offset losses from the drop in ARCHER-DANIELS MID's long position.| State Bank vs. Tower One Wireless | State Bank vs. 24SEVENOFFICE GROUP AB | State Bank vs. BORR DRILLING NEW | State Bank vs. THAI BEVERAGE |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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