Correlation Between CHAMPION BREWERIES and FIDELITY BANK
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By analyzing existing cross correlation between CHAMPION BREWERIES PLC and FIDELITY BANK PLC, you can compare the effects of market volatilities on CHAMPION BREWERIES and FIDELITY 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 CHAMPION BREWERIES with a short position of FIDELITY BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHAMPION BREWERIES and FIDELITY BANK.
Diversification Opportunities for CHAMPION BREWERIES and FIDELITY BANK
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHAMPION and FIDELITY is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding CHAMPION BREWERIES PLC and FIDELITY BANK PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIDELITY BANK PLC and CHAMPION BREWERIES 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 CHAMPION BREWERIES PLC are associated (or correlated) with FIDELITY BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIDELITY BANK PLC has no effect on the direction of CHAMPION BREWERIES i.e., CHAMPION BREWERIES and FIDELITY BANK go up and down completely randomly.
Pair Corralation between CHAMPION BREWERIES and FIDELITY BANK
Assuming the 90 days trading horizon CHAMPION BREWERIES is expected to generate 1.51 times less return on investment than FIDELITY BANK. In addition to that, CHAMPION BREWERIES is 1.09 times more volatile than FIDELITY BANK PLC. It trades about 0.05 of its total potential returns per unit of risk. FIDELITY BANK PLC is currently generating about 0.07 per unit of volatility. If you would invest 915.00 in FIDELITY BANK PLC on September 2, 2024 and sell it today you would earn a total of 615.00 from holding FIDELITY BANK PLC or generate 67.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHAMPION BREWERIES PLC vs. FIDELITY BANK PLC
Performance |
| Timeline |
| CHAMPION BREWERIES PLC |
| FIDELITY BANK PLC |
CHAMPION BREWERIES and FIDELITY BANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHAMPION BREWERIES and FIDELITY BANK
The main advantage of trading using opposite CHAMPION BREWERIES and FIDELITY BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHAMPION BREWERIES position performs unexpectedly, FIDELITY 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 FIDELITY BANK will offset losses from the drop in FIDELITY BANK's long position.The idea behind CHAMPION BREWERIES PLC and FIDELITY BANK PLC 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.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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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