Correlation Between Commercial International and Nedbank
Can any of the company-specific risk be diversified away by investing in both Commercial International and Nedbank 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 Commercial International and Nedbank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial International Bank and Nedbank Group, you can compare the effects of market volatilities on Commercial International and Nedbank 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 Commercial International with a short position of Nedbank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial International and Nedbank.
Diversification Opportunities for Commercial International and Nedbank
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commercial and Nedbank is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Commercial International Bank and Nedbank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nedbank Group and Commercial International 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 Commercial International Bank are associated (or correlated) with Nedbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nedbank Group has no effect on the direction of Commercial International i.e., Commercial International and Nedbank go up and down completely randomly.
Pair Corralation between Commercial International and Nedbank
Assuming the 90 days horizon Commercial International is expected to generate 1.85 times less return on investment than Nedbank. In addition to that, Commercial International is 1.19 times more volatile than Nedbank Group. It trades about 0.02 of its total potential returns per unit of risk. Nedbank Group is currently generating about 0.05 per unit of volatility. If you would invest 1,032 in Nedbank Group on August 24, 2024 and sell it today you would earn a total of 611.00 from holding Nedbank Group or generate 59.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial International Bank vs. Nedbank Group
Performance |
| Timeline |
| Commercial International |
| Nedbank Group |
Commercial International and Nedbank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial International and Nedbank
The main advantage of trading using opposite Commercial International and Nedbank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial International position performs unexpectedly, Nedbank 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 Nedbank will offset losses from the drop in Nedbank's long position.| Commercial International vs. Nedbank Group | Commercial International vs. Standard Bank Group | Commercial International vs. Bank Central Asia | Commercial International vs. PSB Holdings |
| Nedbank vs. Standard Bank Group | Nedbank vs. Bank Central Asia | Nedbank vs. PSB Holdings | Nedbank vs. United Overseas Bank |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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