Correlation Between State Bank and M Winkworth

Can any of the company-specific risk be diversified away by investing in both State Bank and M Winkworth 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 M Winkworth 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 M Winkworth PLC, you can compare the effects of market volatilities on State Bank and M Winkworth 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 M Winkworth. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and M Winkworth.

Diversification Opportunities for State Bank and M Winkworth

-0.46

Correlation Coefficient

State Bank  M Winkworth

Very good diversification

The 3 months correlation between State and WINK is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and M Winkworth PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Winkworth PLC 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 M Winkworth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Winkworth PLC has no effect on the direction of State Bank i.e., State Bank and M Winkworth go up and down completely randomly.

Pair Corralation between State Bank and M Winkworth

Assuming the 90 days trading horizon State Bank is expected to generate 1.14 times less return on investment than M Winkworth. In addition to that, State Bank is 1.01 times more volatile than M Winkworth PLC. It trades about 0.06 of its total potential returns per unit of risk. M Winkworth PLC is currently generating about 0.07 per unit of volatility. If you would invest  14,990  in M Winkworth PLC on October 7, 2024 and sell it today you would earn a total of  4,510  from holding M Winkworth PLC or generate 30.09% return on investment over 90 days.

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

State Bank of  vs.  M Winkworth PLC

State Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days State Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, State Bank is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

M Winkworth PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days M Winkworth PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, M Winkworth is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with State Bank and M Winkworth

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

The idea behind State Bank of and M Winkworth PLC 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.