Correlation Between Shinhan Financial and Loyalty Ventures
Can any of the company-specific risk be diversified away by investing in both Shinhan Financial and Loyalty Ventures 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 Shinhan Financial and Loyalty Ventures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinhan Financial Group and Loyalty Ventures, you can compare the effects of market volatilities on Shinhan Financial and Loyalty Ventures 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 Shinhan Financial with a short position of Loyalty Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Financial and Loyalty Ventures.
Diversification Opportunities for Shinhan Financial and Loyalty Ventures
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shinhan and Loyalty is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Financial Group and Loyalty Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loyalty Ventures and Shinhan Financial 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 Shinhan Financial Group are associated (or correlated) with Loyalty Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loyalty Ventures has no effect on the direction of Shinhan Financial i.e., Shinhan Financial and Loyalty Ventures go up and down completely randomly.
Pair Corralation between Shinhan Financial and Loyalty Ventures
Considering the 90-day investment horizon Shinhan Financial Group is expected to generate 0.05 times more return on investment than Loyalty Ventures. However, Shinhan Financial Group is 20.27 times less risky than Loyalty Ventures. It trades about 0.05 of its potential returns per unit of risk. Loyalty Ventures is currently generating about -0.16 per unit of risk. If you would invest 2,384 in Shinhan Financial Group on October 5, 2024 and sell it today you would earn a total of 943.50 from holding Shinhan Financial Group or generate 39.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 5.49% |
Values | Daily Returns |
Shinhan Financial Group vs. Loyalty Ventures
Performance |
Timeline |
Shinhan Financial |
Loyalty Ventures |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shinhan Financial and Loyalty Ventures Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shinhan Financial and Loyalty Ventures
The main advantage of trading using opposite Shinhan Financial and Loyalty Ventures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Financial position performs unexpectedly, Loyalty Ventures 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 Loyalty Ventures will offset losses from the drop in Loyalty Ventures' long position.Shinhan Financial vs. Community West Bancshares | Shinhan Financial vs. First Financial Northwest | Shinhan Financial vs. Ponce Financial Group | Shinhan Financial vs. Finwise Bancorp |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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