Correlation Between Bankers Investment and Sydbank

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

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

Diversification Opportunities for Bankers Investment and Sydbank

0.7

Correlation Coefficient

Bankers Investment  Sydbank

Poor diversification

The 3 months correlation between Bankers and Sydbank is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bankers Investment Trust and Sydbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sydbank and Bankers 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 Bankers Investment Trust are associated (or correlated) with Sydbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sydbank has no effect on the direction of Bankers Investment i.e., Bankers Investment and Sydbank go up and down completely randomly.

Pair Corralation between Bankers Investment and Sydbank

Assuming the 90 days trading horizon Bankers Investment is expected to generate 1.11 times less return on investment than Sydbank. But when comparing it to its historical volatility, Bankers Investment Trust is 1.86 times less risky than Sydbank. It trades about 0.38 of its potential returns per unit of risk. Sydbank is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  35,260  in Sydbank on October 20, 2024 and sell it today you would earn a total of  2,680  from holding Sydbank or generate 7.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Bankers Investment Trust  vs.  Sydbank

Bankers Investment Trust

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bankers Investment Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bankers Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sydbank

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sydbank are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Sydbank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bankers Investment and Sydbank

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

The idea behind Bankers Investment Trust and Sydbank 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.

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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.