Correlation Between State Bank and McPhy Energy
Can any of the company-specific risk be diversified away by investing in both State Bank and McPhy Energy 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 McPhy Energy 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 McPhy Energy SA, you can compare the effects of market volatilities on State Bank and McPhy Energy 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 McPhy Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and McPhy Energy.
Diversification Opportunities for State Bank and McPhy Energy
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between State and McPhy is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and McPhy Energy SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McPhy Energy SA 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 McPhy Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McPhy Energy SA has no effect on the direction of State Bank i.e., State Bank and McPhy Energy go up and down completely randomly.
Pair Corralation between State Bank and McPhy Energy
Assuming the 90 days horizon State Bank of is expected to generate 0.47 times more return on investment than McPhy Energy. However, State Bank of is 2.13 times less risky than McPhy Energy. It trades about 0.04 of its potential returns per unit of risk. McPhy Energy SA is currently generating about -0.19 per unit of risk. If you would invest 8,600 in State Bank of on September 3, 2024 and sell it today you would earn a total of 750.00 from holding State Bank of or generate 8.72% 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. McPhy Energy SA
Performance |
| Timeline |
| State Bank |
| McPhy Energy SA |
State Bank and McPhy Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and McPhy Energy
The main advantage of trading using opposite State Bank and McPhy Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, McPhy Energy 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 McPhy Energy will offset losses from the drop in McPhy Energy's long position.| State Bank vs. Evolution Mining Limited | State Bank vs. MTI WIRELESS EDGE | State Bank vs. GALENA MINING LTD | State Bank vs. MCEWEN MINING INC |
| McPhy Energy vs. MEDICAL FACILITIES NEW | McPhy Energy vs. Computershare Limited | McPhy Energy vs. Consolidated Communications Holdings | McPhy Energy vs. INTERSHOP Communications Aktiengesellschaft |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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