Correlation Between SLM Corp and Deneb Investments
Can any of the company-specific risk be diversified away by investing in both SLM Corp and Deneb Investments 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 Deneb Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sanlam and Deneb Investments, you can compare the effects of market volatilities on SLM Corp and Deneb Investments 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 Deneb Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLM Corp and Deneb Investments.
Diversification Opportunities for SLM Corp and Deneb Investments
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SLM and Deneb is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Sanlam and Deneb Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deneb Investments 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 Deneb Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deneb Investments has no effect on the direction of SLM Corp i.e., SLM Corp and Deneb Investments go up and down completely randomly.
Pair Corralation between SLM Corp and Deneb Investments
Assuming the 90 days trading horizon SLM Corp is expected to generate 25.4 times less return on investment than Deneb Investments. But when comparing it to its historical volatility, Sanlam is 42.82 times less risky than Deneb Investments. It trades about 0.1 of its potential returns per unit of risk. Deneb Investments is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 22,073 in Deneb Investments on August 28, 2024 and sell it today you would earn a total of 3,827 from holding Deneb Investments or generate 17.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sanlam vs. Deneb Investments
Performance |
| Timeline |
| SLM Corp |
| Deneb Investments |
SLM Corp and Deneb Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SLM Corp and Deneb Investments
The main advantage of trading using opposite SLM Corp and Deneb Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLM Corp position performs unexpectedly, Deneb Investments 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 Deneb Investments will offset losses from the drop in Deneb Investments' long position.| SLM Corp vs. Old Mutual | SLM Corp vs. Centaur Bci Balanced | SLM Corp vs. Sabvest Capital | SLM Corp vs. Growthpoint Properties |
| Deneb Investments vs. Blue Label Telecoms | Deneb Investments vs. CA Sales Holdings | Deneb Investments vs. Allied Electronics | Deneb Investments vs. RCL Foods |
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 Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |