Correlation Between Solera National and SVB T

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

By analyzing existing cross correlation between Solera National Bancorp and SVB T Corp, you can compare the effects of market volatilities on Solera National and SVB T 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 Solera National with a short position of SVB T. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solera National and SVB T.

Diversification Opportunities for Solera National and SVB T

0.31

Correlation Coefficient

Solera National  SVB T

Weak diversification

The 3 months correlation between Solera and SVB is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Solera National Bancorp and SVB T Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SVB T Corp and Solera National 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 Solera National Bancorp are associated (or correlated) with SVB T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SVB T Corp has no effect on the direction of Solera National i.e., Solera National and SVB T go up and down completely randomly.

Pair Corralation between Solera National and SVB T

Given the investment horizon of 90 days Solera National Bancorp is expected to under-perform the SVB T. In addition to that, Solera National is 13.52 times more volatile than SVB T Corp. It trades about -0.11 of its total potential returns per unit of risk. SVB T Corp is currently generating about -0.08 per unit of volatility. If you would invest  4,240  in SVB T Corp on September 17, 2024 and sell it today you would lose (15.00) from holding SVB T Corp or give up 0.35% of portfolio value over 90 days.

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

Solera National Bancorp  vs.  SVB T Corp

Solera National Bancorp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Solera National Bancorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Solera National may actually be approaching a critical reversion point that can send shares even higher in January 2025.

SVB T Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SVB T Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, SVB T is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Solera National and SVB T

The main advantage of trading using opposite Solera National and SVB T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solera National position performs unexpectedly, SVB T 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 SVB T will offset losses from the drop in SVB T's long position.

The idea behind Solera National Bancorp and SVB T Corp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.