Correlation Between SLM Corp and Bytes Technology
Can any of the company-specific risk be diversified away by investing in both SLM Corp and Bytes Technology 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 SLM Corp and Bytes Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sanlam and Bytes Technology, you can compare the effects of market volatilities on SLM Corp and Bytes Technology 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 SLM Corp with a short position of Bytes Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLM Corp and Bytes Technology.
Diversification Opportunities for SLM Corp and Bytes Technology
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between SLM and Bytes is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sanlam and Bytes Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bytes Technology and SLM Corp 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 Sanlam are associated (or correlated) with Bytes Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bytes Technology has no effect on the direction of SLM Corp i.e., SLM Corp and Bytes Technology go up and down completely randomly.
Pair Corralation between SLM Corp and Bytes Technology
Assuming the 90 days trading horizon Sanlam is expected to generate 0.71 times more return on investment than Bytes Technology. However, Sanlam is 1.42 times less risky than Bytes Technology. It trades about 0.11 of its potential returns per unit of risk. Bytes Technology is currently generating about -0.07 per unit of risk. If you would invest 723,500 in Sanlam on September 2, 2024 and sell it today you would earn a total of 157,500 from holding Sanlam or generate 21.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sanlam vs. Bytes Technology
Performance |
| Timeline |
| SLM Corp |
| Bytes Technology |
SLM Corp and Bytes Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SLM Corp and Bytes Technology
The main advantage of trading using opposite SLM Corp and Bytes Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLM Corp position performs unexpectedly, Bytes Technology 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 Bytes Technology will offset losses from the drop in Bytes Technology's long position.| SLM Corp vs. Sasol Ltd Bee | SLM Corp vs. Centaur Bci Balanced | SLM Corp vs. Sabvest Capital | SLM Corp vs. Growthpoint Properties |
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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