Correlation Between Supermarket Income and SoftBank Group

Can any of the company-specific risk be diversified away by investing in both Supermarket Income and SoftBank Group 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 Supermarket Income and SoftBank Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Supermarket Income REIT and SoftBank Group Corp, you can compare the effects of market volatilities on Supermarket Income and SoftBank Group 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 Supermarket Income with a short position of SoftBank Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supermarket Income and SoftBank Group.

Diversification Opportunities for Supermarket Income and SoftBank Group

-0.65

Correlation Coefficient

Supermarket Income  SoftBank Group

Excellent diversification

The 3 months correlation between Supermarket and SoftBank is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Supermarket Income REIT and SoftBank Group Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SoftBank Group Corp and Supermarket Income 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 Supermarket Income REIT are associated (or correlated) with SoftBank Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SoftBank Group Corp has no effect on the direction of Supermarket Income i.e., Supermarket Income and SoftBank Group go up and down completely randomly.

Pair Corralation between Supermarket Income and SoftBank Group

Assuming the 90 days trading horizon Supermarket Income REIT is expected to under-perform the SoftBank Group. But the stock apears to be less risky and, when comparing its historical volatility, Supermarket Income REIT is 2.62 times less risky than SoftBank Group. The stock trades about -0.12 of its potential returns per unit of risk. The SoftBank Group Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  814,779  in SoftBank Group Corp on September 14, 2024 and sell it today you would earn a total of  106,521  from holding SoftBank Group Corp or generate 13.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	65.63%
Values	Daily Returns

Supermarket Income REIT  vs.  SoftBank Group Corp

Supermarket Income REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Supermarket Income REIT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

SoftBank Group Corp

Risk-Adjusted Performance

10 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SoftBank Group Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, SoftBank Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Supermarket Income and SoftBank Group

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

The idea behind Supermarket Income REIT and SoftBank Group 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.