Correlation Between SFL and Pinterest

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

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

Diversification Opportunities for SFL and Pinterest

0.64

Correlation Coefficient

SFL  Pinterest

Poor diversification

The 3 months correlation between SFL and Pinterest is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding SFL Corp. and Pinterest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinterest and SFL 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 SFL Corporation are associated (or correlated) with Pinterest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinterest has no effect on the direction of SFL i.e., SFL and Pinterest go up and down completely randomly.

Pair Corralation between SFL and Pinterest

Considering the 90-day investment horizon SFL Corporation is expected to generate 0.61 times more return on investment than Pinterest. However, SFL Corporation is 1.63 times less risky than Pinterest. It trades about -0.05 of its potential returns per unit of risk. Pinterest is currently generating about -0.07 per unit of risk. If you would invest  1,020  in SFL Corporation on September 27, 2024 and sell it today you would lose (15.00) from holding SFL Corporation or give up 1.47% of portfolio value over 90 days.

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

SFL Corp.  vs.  Pinterest

SFL Corporation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SFL Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pinterest

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SFL and Pinterest

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

The idea behind SFL Corporation and Pinterest 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.