Correlation Between SRH Total and Tri Continental

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

By analyzing existing cross correlation between SRH Total Return and Tri Continental Closed, you can compare the effects of market volatilities on SRH Total and Tri Continental 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 SRH Total with a short position of Tri Continental. Check out your portfolio center. Please also check ongoing floating volatility patterns of SRH Total and Tri Continental.

Diversification Opportunities for SRH Total and Tri Continental

0.76

Correlation Coefficient

SRH Total  Tri Continental

Poor diversification

The 3 months correlation between SRH and Tri is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding SRH Total Return and Tri Continental Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tri Continental Closed and SRH Total 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 SRH Total Return are associated (or correlated) with Tri Continental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tri Continental Closed has no effect on the direction of SRH Total i.e., SRH Total and Tri Continental go up and down completely randomly.

Pair Corralation between SRH Total and Tri Continental

Given the investment horizon of 90 days SRH Total is expected to generate 1.33 times less return on investment than Tri Continental. In addition to that, SRH Total is 1.45 times more volatile than Tri Continental Closed. It trades about 0.12 of its total potential returns per unit of risk. Tri Continental Closed is currently generating about 0.23 per unit of volatility. If you would invest  3,148  in Tri Continental Closed on August 31, 2024 and sell it today you would earn a total of  270.00  from holding Tri Continental Closed or generate 8.58% return on investment over 90 days.

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

SRH Total Return  vs.  Tri Continental Closed

SRH Total Return

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SRH Total Return are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, SRH Total is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Tri Continental Closed

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tri Continental Closed are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Tri Continental may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with SRH Total and Tri Continental

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

The idea behind SRH Total Return and Tri Continental Closed 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..