Correlation Between Absa Group and First Guaranty
Can any of the company-specific risk be diversified away by investing in both Absa Group and First Guaranty 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 Absa Group and First Guaranty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Absa Group Limited and First Guaranty Bancshares, you can compare the effects of market volatilities on Absa Group and First Guaranty 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 Absa Group with a short position of First Guaranty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Absa Group and First Guaranty.
Diversification Opportunities for Absa Group and First Guaranty
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Absa and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Absa Group Limited and First Guaranty Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Guaranty Bancshares and Absa Group 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 Absa Group Limited are associated (or correlated) with First Guaranty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Guaranty Bancshares has no effect on the direction of Absa Group i.e., Absa Group and First Guaranty go up and down completely randomly.
Pair Corralation between Absa Group and First Guaranty
If you would invest 1,960 in First Guaranty Bancshares on November 18, 2024 and sell it today you would earn a total of 51.00 from holding First Guaranty Bancshares or generate 2.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Absa Group Limited vs. First Guaranty Bancshares
Performance |
| Timeline |
| Absa Group Limited |
| First Guaranty Bancshares |
Absa Group and First Guaranty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Absa Group and First Guaranty
The main advantage of trading using opposite Absa Group and First Guaranty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absa Group position performs unexpectedly, First Guaranty 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 First Guaranty will offset losses from the drop in First Guaranty's long position.The idea behind Absa Group Limited and First Guaranty Bancshares 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.| First Guaranty vs. CNB Financial | First Guaranty vs. First Citizens BancShares | First Guaranty vs. Texas Capital Bancshares | First Guaranty vs. Merchants Bancorp |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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