Correlation Between State Bank and Aeroports
Can any of the company-specific risk be diversified away by investing in both State Bank and Aeroports 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 Aeroports 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 Aeroports de Paris, you can compare the effects of market volatilities on State Bank and Aeroports 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 Aeroports. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Aeroports.
Diversification Opportunities for State Bank and Aeroports
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between State and Aeroports is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Aeroports de Paris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeroports de Paris 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 Aeroports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeroports de Paris has no effect on the direction of State Bank i.e., State Bank and Aeroports go up and down completely randomly.
Pair Corralation between State Bank and Aeroports
Assuming the 90 days horizon State Bank of is expected to generate 1.26 times more return on investment than Aeroports. However, State Bank is 1.26 times more volatile than Aeroports de Paris. It trades about 0.08 of its potential returns per unit of risk. Aeroports de Paris is currently generating about -0.03 per unit of risk. If you would invest 6,970 in State Bank of on September 1, 2024 and sell it today you would earn a total of 2,280 from holding State Bank of or generate 32.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.53% |
| Values | Daily Returns |
State Bank of vs. Aeroports de Paris
Performance |
| Timeline |
| State Bank |
| Aeroports de Paris |
State Bank and Aeroports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Bank and Aeroports
The main advantage of trading using opposite State Bank and Aeroports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Aeroports 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 Aeroports will offset losses from the drop in Aeroports' long position.| State Bank vs. Cars Inc | State Bank vs. SEI INVESTMENTS | State Bank vs. HK Electric Investments | State Bank vs. CARSALESCOM |
| Aeroports vs. ANTA SPORTS PRODUCT | Aeroports vs. Cleanaway Waste Management | Aeroports vs. GRUPO CARSO A1 | Aeroports vs. ePlay Digital |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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