Correlation Between SLM Corp and Growthpoint Properties
Can any of the company-specific risk be diversified away by investing in both SLM Corp and Growthpoint Properties 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 Growthpoint Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sanlam and Growthpoint Properties, you can compare the effects of market volatilities on SLM Corp and Growthpoint Properties 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 Growthpoint Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLM Corp and Growthpoint Properties.
Diversification Opportunities for SLM Corp and Growthpoint Properties
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SLM and Growthpoint is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Sanlam and Growthpoint Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growthpoint Properties 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 Growthpoint Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growthpoint Properties has no effect on the direction of SLM Corp i.e., SLM Corp and Growthpoint Properties go up and down completely randomly.
Pair Corralation between SLM Corp and Growthpoint Properties
Assuming the 90 days trading horizon Sanlam is expected to generate 1.0 times more return on investment than Growthpoint Properties. However, SLM Corp is 1.0 times more volatile than Growthpoint Properties. It trades about 0.11 of its potential returns per unit of risk. Growthpoint Properties is currently generating about 0.05 per unit of risk. If you would invest 514,348 in Sanlam on August 27, 2024 and sell it today you would earn a total of 382,352 from holding Sanlam or generate 74.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sanlam vs. Growthpoint Properties
Performance |
| Timeline |
| SLM Corp |
| Growthpoint Properties |
SLM Corp and Growthpoint Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SLM Corp and Growthpoint Properties
The main advantage of trading using opposite SLM Corp and Growthpoint Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLM Corp position performs unexpectedly, Growthpoint Properties 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 Growthpoint Properties will offset losses from the drop in Growthpoint Properties' long position.| SLM Corp vs. Old Mutual | 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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