Correlation Between SFL and STATE

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

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

Diversification Opportunities for SFL and STATE

-0.19

Correlation Coefficient

SFL  STATE

Good diversification

The 3 months correlation between SFL and STATE is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding SFL Corp. and STATE STR P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STATE STR P 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 STATE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STATE STR P has no effect on the direction of SFL i.e., SFL and STATE go up and down completely randomly.

Pair Corralation between SFL and STATE

Considering the 90-day investment horizon SFL Corporation is expected to under-perform the STATE. In addition to that, SFL is 2.97 times more volatile than STATE STR P. It trades about -0.13 of its total potential returns per unit of risk. STATE STR P is currently generating about -0.1 per unit of volatility. If you would invest  9,760  in STATE STR P on December 30, 2024 and sell it today you would lose (386.00) from holding STATE STR P or give up 3.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

SFL Corp.  vs.  STATE STR P

SFL Corporation

Risk-Adjusted Performance

Very Weak

Over the last 90 days SFL Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

STATE STR P

Risk-Adjusted Performance

Very Weak

Over the last 90 days STATE STR P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, STATE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with SFL and STATE

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

The idea behind SFL Corporation and STATE STR P 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.