Correlation Between State Bank and Herald Investment
Can any of the company-specific risk be diversified away by investing in both State Bank and Herald Investment 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 State Bank and Herald Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Bank of and Herald Investment Trust, you can compare the effects of market volatilities on State Bank and Herald Investment 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 State Bank with a short position of Herald Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Herald Investment.
Diversification Opportunities for State Bank and Herald Investment
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between State and Herald is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Herald Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herald Investment Trust and State 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 State Bank of are associated (or correlated) with Herald Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herald Investment Trust has no effect on the direction of State Bank i.e., State Bank and Herald Investment go up and down completely randomly.
Pair Corralation between State Bank and Herald Investment
Assuming the 90 days trading horizon State Bank of is expected to under-perform the Herald Investment. But the stock apears to be less risky and, when comparing its historical volatility, State Bank of is 1.02 times less risky than Herald Investment. The stock trades about -0.67 of its potential returns per unit of risk. The Herald Investment Trust is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 250,000 in Herald Investment Trust on October 17, 2024 and sell it today you would lose (500.00) from holding Herald Investment Trust or give up 0.2% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
State Bank of vs. Herald Investment Trust
Performance |
Timeline |
State Bank |
Herald Investment Trust |
State Bank and Herald Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with State Bank and Herald Investment
The main advantage of trading using opposite State Bank and Herald Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Herald Investment 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 Herald Investment will offset losses from the drop in Herald Investment's long position.State Bank vs. MTI Wireless Edge | State Bank vs. Grieg Seafood | State Bank vs. Zoom Video Communications | State Bank vs. Universal Display Corp |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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