Correlation Between AfricaRhodium ETF and SLM Corp

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

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

Diversification Opportunities for AfricaRhodium ETF and SLM Corp

-0.41

Correlation Coefficient

AfricaRhodium ETF  SLM Corp

Very good diversification

The 3 months correlation between AfricaRhodium and SLM is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding AfricaRhodium ETF and Sanlam in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLM Corp and AfricaRhodium ETF 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 AfricaRhodium ETF are associated (or correlated) with SLM Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLM Corp has no effect on the direction of AfricaRhodium ETF i.e., AfricaRhodium ETF and SLM Corp go up and down completely randomly.

Pair Corralation between AfricaRhodium ETF and SLM Corp

Assuming the 90 days trading horizon AfricaRhodium ETF is expected to generate 1.01 times more return on investment than SLM Corp. However, AfricaRhodium ETF is 1.01 times more volatile than Sanlam. It trades about 0.02 of its potential returns per unit of risk. Sanlam is currently generating about -0.05 per unit of risk. If you would invest  7,691,100  in AfricaRhodium ETF on December 2, 2024 and sell it today you would earn a total of  87,300  from holding AfricaRhodium ETF or generate 1.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

AfricaRhodium ETF  vs.  Sanlam

AfricaRhodium ETF

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AfricaRhodium ETF are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, AfricaRhodium ETF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

SLM Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sanlam has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, SLM Corp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with AfricaRhodium ETF and SLM Corp

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

The idea behind AfricaRhodium ETF and Sanlam 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.