Correlation Between State Bank and AMP
Can any of the company-specific risk be diversified away by investing in both State Bank and AMP 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 AMP 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 AMP, you can compare the effects of market volatilities on State Bank and AMP 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 AMP. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and AMP.
Diversification Opportunities for State Bank and AMP
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between State and AMP is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and AMP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMP 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 AMP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMP has no effect on the direction of State Bank i.e., State Bank and AMP go up and down completely randomly.
Pair Corralation between State Bank and AMP
Assuming the 90 days horizon State Bank is expected to generate 1.67 times less return on investment than AMP. But when comparing it to its historical volatility, State Bank of is 1.28 times less risky than AMP. It trades about 0.08 of its potential returns per unit of risk. AMP is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 53.00 in AMP on September 2, 2024 and sell it today you would earn a total of 41.00 from holding AMP or generate 77.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Bank of vs. AMP
Performance |
| Timeline |
| State Bank |
| AMP |
State Bank and AMP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and AMP
The main advantage of trading using opposite State Bank and AMP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, AMP 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 AMP will offset losses from the drop in AMP'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 |
| AMP vs. SIVERS SEMICONDUCTORS AB | AMP vs. Darden Restaurants | AMP vs. Reliance Steel Aluminum | AMP vs. Q2M Managementberatung AG |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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