Correlation Between Saratoga Investment and GSK Plc
Can any of the company-specific risk be diversified away by investing in both Saratoga Investment and GSK Plc 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 Saratoga Investment and GSK Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saratoga Investment Corp and GSK Plc, you can compare the effects of market volatilities on Saratoga Investment and GSK Plc 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 Saratoga Investment with a short position of GSK Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saratoga Investment and GSK Plc.
Diversification Opportunities for Saratoga Investment and GSK Plc
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Saratoga and GSK is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Saratoga Investment Corp and GSK Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSK Plc and Saratoga Investment 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 Saratoga Investment Corp are associated (or correlated) with GSK Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSK Plc has no effect on the direction of Saratoga Investment i.e., Saratoga Investment and GSK Plc go up and down completely randomly.
Pair Corralation between Saratoga Investment and GSK Plc
Considering the 90-day investment horizon Saratoga Investment Corp is expected to under-perform the GSK Plc. But the stock apears to be less risky and, when comparing its historical volatility, Saratoga Investment Corp is 2.98 times less risky than GSK Plc. The stock trades about -0.01 of its potential returns per unit of risk. The GSK Plc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,108 in GSK Plc on December 29, 2023 and sell it today you would earn a total of 12.00 from holding GSK Plc or generate 0.57% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Saratoga Investment Corp vs. GSK Plc
Performance |
Timeline |
Saratoga Investment Corp |
GSK Plc |
Saratoga Investment and GSK Plc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Saratoga Investment and GSK Plc
The main advantage of trading using opposite Saratoga Investment and GSK Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saratoga Investment position performs unexpectedly, GSK Plc 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 GSK Plc will offset losses from the drop in GSK Plc's long position.Saratoga Investment vs. Visa Class A | Saratoga Investment vs. Nocturne Acquisition Corp | Saratoga Investment vs. Mill City Ventures | Saratoga Investment vs. Metal Sky Star |
GSK Plc vs. Eli Lilly And | GSK Plc vs. Johnson Johnson | GSK Plc vs. Merck Company | GSK Plc vs. Roche Holding |
Check out your portfolio center.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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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