Correlation Between Silkbank and Jubilee Life
Can any of the company-specific risk be diversified away by investing in both Silkbank and Jubilee Life 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 Silkbank and Jubilee Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silkbank and Jubilee Life Insurance, you can compare the effects of market volatilities on Silkbank and Jubilee Life 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 Silkbank with a short position of Jubilee Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silkbank and Jubilee Life.
Diversification Opportunities for Silkbank and Jubilee Life
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Silkbank and Jubilee is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Silkbank and Jubilee Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jubilee Life Insurance and Silkbank 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 Silkbank are associated (or correlated) with Jubilee Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jubilee Life Insurance has no effect on the direction of Silkbank i.e., Silkbank and Jubilee Life go up and down completely randomly.
Pair Corralation between Silkbank and Jubilee Life
Assuming the 90 days trading horizon Silkbank is expected to generate 2.25 times more return on investment than Jubilee Life. However, Silkbank is 2.25 times more volatile than Jubilee Life Insurance. It trades about 0.16 of its potential returns per unit of risk. Jubilee Life Insurance is currently generating about -0.01 per unit of risk. If you would invest 99.00 in Silkbank on November 28, 2024 and sell it today you would earn a total of 13.00 from holding Silkbank or generate 13.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Silkbank vs. Jubilee Life Insurance
Performance |
| Timeline |
| Silkbank |
| Jubilee Life Insurance |
Silkbank and Jubilee Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Silkbank and Jubilee Life
The main advantage of trading using opposite Silkbank and Jubilee Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silkbank position performs unexpectedly, Jubilee Life 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 Jubilee Life will offset losses from the drop in Jubilee Life's long position.| Silkbank vs. Century Insurance | Silkbank vs. Atlas Insurance | Silkbank vs. Universal Insurance | Silkbank vs. Ittehad Chemicals |
| Jubilee Life vs. Ittehad Chemicals | Jubilee Life vs. Habib Insurance | Jubilee Life vs. Silkbank | Jubilee Life vs. Metropolitan Steel Corp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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