Correlation Between Sony and Banco ABC
Can any of the company-specific risk be diversified away by investing in both Sony and Banco ABC 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 Sony and Banco ABC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sony Group and Banco ABC Brasil, you can compare the effects of market volatilities on Sony and Banco ABC 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 Sony with a short position of Banco ABC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sony and Banco ABC.
Diversification Opportunities for Sony and Banco ABC
Excellent diversification
The 3 months correlation between Sony and Banco is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group and Banco ABC Brasil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco ABC Brasil and Sony 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 Sony Group are associated (or correlated) with Banco ABC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco ABC Brasil has no effect on the direction of Sony i.e., Sony and Banco ABC go up and down completely randomly.
Pair Corralation between Sony and Banco ABC
Assuming the 90 days trading horizon Sony Group is expected to under-perform the Banco ABC. But the stock apears to be less risky and, when comparing its historical volatility, Sony Group is 1.94 times less risky than Banco ABC. The stock trades about -0.29 of its potential returns per unit of risk. The Banco ABC Brasil is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,941 in Banco ABC Brasil on October 23, 2024 and sell it today you would earn a total of 29.00 from holding Banco ABC Brasil or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sony Group vs. Banco ABC Brasil
Performance |
| Timeline |
| Sony Group |
| Banco ABC Brasil |
Sony and Banco ABC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sony and Banco ABC
The main advantage of trading using opposite Sony and Banco ABC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sony position performs unexpectedly, Banco ABC 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 Banco ABC will offset losses from the drop in Banco ABC's long position.| Sony vs. Clover Health Investments, | Sony vs. salesforce inc | Sony vs. Align Technology | Sony vs. CVS Health |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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