Correlation Between Simt Sp and Emerald Banking
Can any of the company-specific risk be diversified away by investing in both Simt Sp and Emerald Banking 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 Simt Sp and Emerald Banking into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Simt Sp 500 and Emerald Banking And, you can compare the effects of market volatilities on Simt Sp and Emerald Banking 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 Simt Sp with a short position of Emerald Banking. Check out your portfolio center. Please also check ongoing floating volatility patterns of Simt Sp and Emerald Banking.
Diversification Opportunities for Simt Sp and Emerald Banking
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Simt and Emerald is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Simt Sp 500 and Emerald Banking And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Banking And and Simt Sp 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 Simt Sp 500 are associated (or correlated) with Emerald Banking. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Banking And has no effect on the direction of Simt Sp i.e., Simt Sp and Emerald Banking go up and down completely randomly.
Pair Corralation between Simt Sp and Emerald Banking
Assuming the 90 days horizon Simt Sp is expected to generate 2.55 times less return on investment than Emerald Banking. But when comparing it to its historical volatility, Simt Sp 500 is 2.1 times less risky than Emerald Banking. It trades about 0.13 of its potential returns per unit of risk. Emerald Banking And is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,791 in Emerald Banking And on August 29, 2024 and sell it today you would earn a total of 692.00 from holding Emerald Banking And or generate 38.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Simt Sp 500 vs. Emerald Banking And
Performance |
| Timeline |
| Simt Sp 500 |
| Emerald Banking And |
Simt Sp and Emerald Banking Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Simt Sp and Emerald Banking
The main advantage of trading using opposite Simt Sp and Emerald Banking positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Simt Sp position performs unexpectedly, Emerald Banking 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 Emerald Banking will offset losses from the drop in Emerald Banking's long position.| Simt Sp vs. Vanguard Total Stock | Simt Sp vs. Vanguard 500 Index | Simt Sp vs. Vanguard Total Stock | Simt Sp vs. Vanguard Total Stock |
| Emerald Banking vs. HUMANA INC | Emerald Banking vs. Aquagold International | Emerald Banking vs. Barloworld Ltd ADR | Emerald Banking vs. Morningstar Unconstrained Allocation |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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