Correlation Between OneSavings Bank and Life Science

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

By analyzing existing cross correlation between OneSavings Bank PLC and Life Science REIT, you can compare the effects of market volatilities on OneSavings Bank and Life Science 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 OneSavings Bank with a short position of Life Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of OneSavings Bank and Life Science.

Diversification Opportunities for OneSavings Bank and Life Science

-0.39

Correlation Coefficient

OneSavings Bank  Life Science

Very good diversification

The 3 months correlation between OneSavings and Life is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding OneSavings Bank PLC and Life Science REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Science REIT and OneSavings Bank 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 OneSavings Bank PLC are associated (or correlated) with Life Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Science REIT has no effect on the direction of OneSavings Bank i.e., OneSavings Bank and Life Science go up and down completely randomly.

Pair Corralation between OneSavings Bank and Life Science

Assuming the 90 days trading horizon OneSavings Bank is expected to generate 1.44 times less return on investment than Life Science. In addition to that, OneSavings Bank is 1.95 times more volatile than Life Science REIT. It trades about 0.04 of its total potential returns per unit of risk. Life Science REIT is currently generating about 0.13 per unit of volatility. If you would invest  3,750  in Life Science REIT on September 24, 2024 and sell it today you would earn a total of  110.00  from holding Life Science REIT or generate 2.93% return on investment over 90 days.

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

OneSavings Bank PLC  vs.  Life Science REIT

OneSavings Bank PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in OneSavings Bank PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, OneSavings Bank is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Life Science REIT

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Life Science REIT are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Life Science unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OneSavings Bank and Life Science

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

The idea behind OneSavings Bank PLC and Life Science REIT 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.