Correlation Between SLR Investment and Relx PLC
Can any of the company-specific risk be diversified away by investing in both SLR Investment and Relx PLC 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 SLR Investment and Relx PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SLR Investment Corp and Relx PLC ADR, you can compare the effects of market volatilities on SLR Investment and Relx PLC 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 SLR Investment with a short position of Relx PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SLR Investment and Relx PLC.
Diversification Opportunities for SLR Investment and Relx PLC
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SLR and Relx is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp and Relx PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Relx PLC ADR and SLR Investment 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 SLR Investment Corp are associated (or correlated) with Relx PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Relx PLC ADR has no effect on the direction of SLR Investment i.e., SLR Investment and Relx PLC go up and down completely randomly.
Pair Corralation between SLR Investment and Relx PLC
Assuming the 90 days horizon SLR Investment is expected to generate 1.63 times less return on investment than Relx PLC. But when comparing it to its historical volatility, SLR Investment Corp is 1.06 times less risky than Relx PLC. It trades about 0.06 of its potential returns per unit of risk. Relx PLC ADR is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,119 in Relx PLC ADR on September 26, 2024 and sell it today you would earn a total of 1,241 from holding Relx PLC ADR or generate 39.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SLR Investment Corp vs. Relx PLC ADR
Performance |
| Timeline |
| SLR Investment Corp |
| Relx PLC ADR |
SLR Investment and Relx PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SLR Investment and Relx PLC
The main advantage of trading using opposite SLR Investment and Relx PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLR Investment position performs unexpectedly, Relx PLC 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 Relx PLC will offset losses from the drop in Relx PLC's long position.| SLR Investment vs. Blackstone Group | SLR Investment vs. The Bank of | SLR Investment vs. Ameriprise Financial | SLR Investment vs. State Street |
| Relx PLC vs. EAT WELL INVESTMENT | Relx PLC vs. Virtus Investment Partners | Relx PLC vs. SLR Investment Corp | Relx PLC vs. TOREX SEMICONDUCTOR LTD |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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