Correlation Between Sydbank and Target Corp

Can any of the company-specific risk be diversified away by investing in both Sydbank and Target Corp 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 Sydbank and Target Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sydbank and Target Corp, you can compare the effects of market volatilities on Sydbank and Target Corp 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 Sydbank with a short position of Target Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sydbank and Target Corp.

Diversification Opportunities for Sydbank and Target Corp

-0.87

Correlation Coefficient

Sydbank  Target Corp

Pay attention - limited upside

The 3 months correlation between Sydbank and Target is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Sydbank and Target Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Corp and Sydbank 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 Sydbank are associated (or correlated) with Target Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Corp has no effect on the direction of Sydbank i.e., Sydbank and Target Corp go up and down completely randomly.

Pair Corralation between Sydbank and Target Corp

Assuming the 90 days trading horizon Sydbank is expected to generate 0.8 times more return on investment than Target Corp. However, Sydbank is 1.26 times less risky than Target Corp. It trades about 0.23 of its potential returns per unit of risk. Target Corp is currently generating about -0.16 per unit of risk. If you would invest  34,836  in Sydbank on December 24, 2024 and sell it today you would earn a total of  7,754  from holding Sydbank or generate 22.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	96.88%
Values	Daily Returns

Sydbank  vs.  Target Corp

Sydbank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sydbank are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sydbank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Target Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Target Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Sydbank and Target Corp

The main advantage of trading using opposite Sydbank and Target Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sydbank position performs unexpectedly, Target Corp 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 Target Corp will offset losses from the drop in Target Corp's long position.

The idea behind Sydbank and Target Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.