Correlation Between Investment Trust and State Bank

Can any of the company-specific risk be diversified away by investing in both Investment Trust and State Bank 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 Investment Trust and State Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Investment Trust and State Bank of, you can compare the effects of market volatilities on Investment Trust and State Bank 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 Investment Trust with a short position of State Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment Trust and State Bank.

Diversification Opportunities for Investment Trust and State Bank

0.45

Correlation Coefficient

Investment Trust  State Bank

Very weak diversification

The 3 months correlation between Investment and State is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding The Investment Trust and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank and Investment Trust 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 The Investment Trust are associated (or correlated) with State Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Bank has no effect on the direction of Investment Trust i.e., Investment Trust and State Bank go up and down completely randomly.

Pair Corralation between Investment Trust and State Bank

Assuming the 90 days trading horizon The Investment Trust is expected to generate 1.61 times more return on investment than State Bank. However, Investment Trust is 1.61 times more volatile than State Bank of. It trades about 0.01 of its potential returns per unit of risk. State Bank of is currently generating about 0.02 per unit of risk. If you would invest  19,907  in The Investment Trust on September 26, 2024 and sell it today you would earn a total of  29.00  from holding The Investment Trust or generate 0.15% return on investment over 90 days.

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

The Investment Trust  vs.  State Bank of

Investment Trust

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Investment Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Investment Trust is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

State Bank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in State Bank of are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, State Bank is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Investment Trust and State Bank

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

The idea behind The Investment Trust and State Bank of 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.