Correlation Between SG Fleet and Homeco Daily

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

By analyzing existing cross correlation between SG Fleet Group and Homeco Daily Needs, you can compare the effects of market volatilities on SG Fleet and Homeco Daily 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 SG Fleet with a short position of Homeco Daily. Check out your portfolio center. Please also check ongoing floating volatility patterns of SG Fleet and Homeco Daily.

Diversification Opportunities for SG Fleet and Homeco Daily

0.62

Correlation Coefficient

SG Fleet  Homeco Daily

Poor diversification

The 3 months correlation between SGF and Homeco is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding SG Fleet Group and Homeco Daily Needs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homeco Daily Needs and SG Fleet 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 SG Fleet Group are associated (or correlated) with Homeco Daily. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homeco Daily Needs has no effect on the direction of SG Fleet i.e., SG Fleet and Homeco Daily go up and down completely randomly.

Pair Corralation between SG Fleet and Homeco Daily

Assuming the 90 days trading horizon SG Fleet is expected to generate 2.04 times less return on investment than Homeco Daily. But when comparing it to its historical volatility, SG Fleet Group is 4.52 times less risky than Homeco Daily. It trades about 0.1 of its potential returns per unit of risk. Homeco Daily Needs is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  113.00  in Homeco Daily Needs on December 20, 2024 and sell it today you would earn a total of  3.00  from holding Homeco Daily Needs or generate 2.65% return on investment over 90 days.

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

SG Fleet Group  vs.  Homeco Daily Needs

SG Fleet Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SG Fleet Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, SG Fleet is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Homeco Daily Needs

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Homeco Daily Needs are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Homeco Daily 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 SG Fleet and Homeco Daily

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

The idea behind SG Fleet Group and Homeco Daily Needs 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.