Correlation Between SP Global and SohuCom
Can any of the company-specific risk be diversified away by investing in both SP Global and SohuCom 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 SP Global and SohuCom into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SP Global and SohuCom, you can compare the effects of market volatilities on SP Global and SohuCom 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 SP Global with a short position of SohuCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP Global and SohuCom.
Diversification Opportunities for SP Global and SohuCom
Very good diversification
The 3 months correlation between SPGI and SohuCom is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding SP Global and SohuCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SohuCom and SP Global 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 SP Global are associated (or correlated) with SohuCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SohuCom has no effect on the direction of SP Global i.e., SP Global and SohuCom go up and down completely randomly.
Pair Corralation between SP Global and SohuCom
Given the investment horizon of 90 days SP Global is expected to generate 0.59 times more return on investment than SohuCom. However, SP Global is 1.69 times less risky than SohuCom. It trades about 0.06 of its potential returns per unit of risk. SohuCom is currently generating about -0.02 per unit of risk. If you would invest 30,639 in SP Global on January 26, 2024 and sell it today you would earn a total of 10,689 from holding SP Global or generate 34.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SP Global vs. SohuCom
Performance |
| Timeline |
| SP Global |
| SohuCom |
SP Global and SohuCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SP Global and SohuCom
The main advantage of trading using opposite SP Global and SohuCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP Global position performs unexpectedly, SohuCom 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 SohuCom will offset losses from the drop in SohuCom's long position.| SP Global vs. Dun Bradstreet Holdings | SP Global vs. Intercontinental Exchange | SP Global vs. Nasdaq Inc | SP Global vs. CME Group |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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