Correlation Between SBI Insurance and MARKET VECTR

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

By analyzing existing cross correlation between SBI Insurance Group and MARKET VECTR RETAIL, you can compare the effects of market volatilities on SBI Insurance and MARKET VECTR 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 SBI Insurance with a short position of MARKET VECTR. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Insurance and MARKET VECTR.

Diversification Opportunities for SBI Insurance and MARKET VECTR

0.83

Correlation Coefficient

SBI Insurance  MARKET VECTR

Very poor diversification

The 3 months correlation between SBI and MARKET is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding SBI Insurance Group and MARKET VECTR RETAIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARKET VECTR RETAIL and SBI Insurance 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 SBI Insurance Group are associated (or correlated) with MARKET VECTR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARKET VECTR RETAIL has no effect on the direction of SBI Insurance i.e., SBI Insurance and MARKET VECTR go up and down completely randomly.

Pair Corralation between SBI Insurance and MARKET VECTR

Assuming the 90 days trading horizon SBI Insurance Group is expected to under-perform the MARKET VECTR. In addition to that, SBI Insurance is 2.2 times more volatile than MARKET VECTR RETAIL. It trades about 0.0 of its total potential returns per unit of risk. MARKET VECTR RETAIL is currently generating about 0.1 per unit of volatility. If you would invest  14,980  in MARKET VECTR RETAIL on October 10, 2024 and sell it today you would earn a total of  6,865  from holding MARKET VECTR RETAIL or generate 45.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.4%
Values	Daily Returns

SBI Insurance Group  vs.  MARKET VECTR RETAIL

SBI Insurance Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SBI Insurance Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, SBI Insurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

MARKET VECTR RETAIL

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with SBI Insurance and MARKET VECTR

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

The idea behind SBI Insurance Group and MARKET VECTR RETAIL 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.