Correlation Between Samsung Electronics and Isabella Bank
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Isabella Bank 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 Samsung Electronics and Isabella Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Electronics Co and Isabella Bank, you can compare the effects of market volatilities on Samsung Electronics and Isabella Bank 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 Samsung Electronics with a short position of Isabella Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Isabella Bank.
Diversification Opportunities for Samsung Electronics and Isabella Bank
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Isabella is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Isabella Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Isabella Bank and Samsung Electronics 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 Samsung Electronics Co are associated (or correlated) with Isabella Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Isabella Bank has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Isabella Bank go up and down completely randomly.
Pair Corralation between Samsung Electronics and Isabella Bank
Assuming the 90 days horizon Samsung Electronics is expected to generate 14.0 times less return on investment than Isabella Bank. But when comparing it to its historical volatility, Samsung Electronics Co is 32.41 times less risky than Isabella Bank. It trades about 0.1 of its potential returns per unit of risk. Isabella Bank is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,934 in Isabella Bank on September 2, 2024 and sell it today you would earn a total of 556.00 from holding Isabella Bank or generate 28.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 89.78% |
| Values | Daily Returns |
Samsung Electronics Co vs. Isabella Bank
Performance |
| Timeline |
| Samsung Electronics |
| Isabella Bank |
Samsung Electronics and Isabella Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Isabella Bank
The main advantage of trading using opposite Samsung Electronics and Isabella Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Isabella Bank 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 Isabella Bank will offset losses from the drop in Isabella Bank's long position.| Samsung Electronics vs. Legacy Education | Samsung Electronics vs. Apple Inc | Samsung Electronics vs. NVIDIA | Samsung Electronics vs. Microsoft |
| Isabella Bank vs. Home Federal Bancorp | Isabella Bank vs. Magyar Bancorp | Isabella Bank vs. ChoiceOne Financial Services | Isabella Bank vs. Heritage Commerce Corp |
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 Stocks Directory module to find actively traded stocks across global markets.
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