Correlation Between Shurgard Self and Solvay SA

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

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

Diversification Opportunities for Shurgard Self and Solvay SA

0.05

Correlation Coefficient

Shurgard Self  Solvay SA

Significant diversification

The 3 months correlation between Shurgard and Solvay is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Shurgard Self Storage and Solvay SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solvay SA and Shurgard Self 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 Shurgard Self Storage are associated (or correlated) with Solvay SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solvay SA has no effect on the direction of Shurgard Self i.e., Shurgard Self and Solvay SA go up and down completely randomly.

Pair Corralation between Shurgard Self and Solvay SA

Assuming the 90 days trading horizon Shurgard Self Storage is expected to under-perform the Solvay SA. But the stock apears to be less risky and, when comparing its historical volatility, Shurgard Self Storage is 1.38 times less risky than Solvay SA. The stock trades about -0.01 of its potential returns per unit of risk. The Solvay SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  3,218  in Solvay SA on September 2, 2024 and sell it today you would earn a total of  53.00  from holding Solvay SA or generate 1.65% return on investment over 90 days.

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

Shurgard Self Storage  vs.  Solvay SA

Shurgard Self Storage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shurgard Self Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Shurgard Self is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Solvay SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Solvay SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Solvay SA is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Shurgard Self and Solvay SA

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

The idea behind Shurgard Self Storage and Solvay SA 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..