Correlation Between Genworth Financial and Sanlam

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

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

Diversification Opportunities for Genworth Financial and Sanlam

-0.07

Correlation Coefficient

Genworth Financial  Sanlam

Good diversification

The 3 months correlation between Genworth and Sanlam is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Genworth Financial and Sanlam Ltd PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanlam Ltd PK and Genworth Financial 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 Genworth Financial are associated (or correlated) with Sanlam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanlam Ltd PK has no effect on the direction of Genworth Financial i.e., Genworth Financial and Sanlam go up and down completely randomly.

Pair Corralation between Genworth Financial and Sanlam

Considering the 90-day investment horizon Genworth Financial is expected to generate 1.29 times more return on investment than Sanlam. However, Genworth Financial is 1.29 times more volatile than Sanlam Ltd PK. It trades about 0.4 of its potential returns per unit of risk. Sanlam Ltd PK is currently generating about 0.03 per unit of risk. If you would invest  658.00  in Genworth Financial on September 2, 2024 and sell it today you would earn a total of  122.00  from holding Genworth Financial or generate 18.54% return on investment over 90 days.

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

Genworth Financial  vs.  Sanlam Ltd PK

Genworth Financial

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genworth Financial are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Genworth Financial showed solid returns over the last few months and may actually be approaching a breakup point.

Sanlam Ltd PK

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sanlam Ltd PK are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Sanlam is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Genworth Financial and Sanlam

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

The idea behind Genworth Financial and Sanlam Ltd PK 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.