Correlation Between SohuCom and Sirius XM
Can any of the company-specific risk be diversified away by investing in both SohuCom and Sirius XM 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 SohuCom and Sirius XM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SohuCom and Sirius XM Holding, you can compare the effects of market volatilities on SohuCom and Sirius XM 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 SohuCom with a short position of Sirius XM. Check out your portfolio center. Please also check ongoing floating volatility patterns of SohuCom and Sirius XM.
Diversification Opportunities for SohuCom and Sirius XM
Pay attention - limited upside
The 3 months correlation between SohuCom and Sirius is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding SohuCom and Sirius XM Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirius XM Holding and SohuCom 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 SohuCom are associated (or correlated) with Sirius XM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirius XM Holding has no effect on the direction of SohuCom i.e., SohuCom and Sirius XM go up and down completely randomly.
Pair Corralation between SohuCom and Sirius XM
Given the investment horizon of 90 days SohuCom is expected to generate 0.78 times more return on investment than Sirius XM. However, SohuCom is 1.28 times less risky than Sirius XM. It trades about 0.25 of its potential returns per unit of risk. Sirius XM Holding is currently generating about -0.57 per unit of risk. If you would invest 1,075 in SohuCom on January 30, 2024 and sell it today you would earn a total of 86.00 from holding SohuCom or generate 8.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
SohuCom vs. Sirius XM Holding
Performance |
Timeline |
SohuCom |
Sirius XM Holding |
SohuCom and Sirius XM Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SohuCom and Sirius XM
The main advantage of trading using opposite SohuCom and Sirius XM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SohuCom position performs unexpectedly, Sirius XM 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 Sirius XM will offset losses from the drop in Sirius XM's long position.The idea behind SohuCom and Sirius XM Holding 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.Sirius XM vs. News Corp B | Sirius XM vs. Marcus | Sirius XM vs. Madison Square Garden | Sirius XM vs. Atlanta Braves Holdings |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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