Correlation Between Community Heritage and Standard Bank
Can any of the company-specific risk be diversified away by investing in both Community Heritage and Standard Bank 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 Community Heritage and Standard Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Community Heritage Financial and Standard Bank Group, you can compare the effects of market volatilities on Community Heritage and Standard 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 Community Heritage with a short position of Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community Heritage and Standard Bank.
Diversification Opportunities for Community Heritage and Standard Bank
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Community and Standard is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Community Heritage Financial and Standard Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Bank Group and Community Heritage 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 Community Heritage Financial are associated (or correlated) with Standard Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Bank Group has no effect on the direction of Community Heritage i.e., Community Heritage and Standard Bank go up and down completely randomly.
Pair Corralation between Community Heritage and Standard Bank
Given the investment horizon of 90 days Community Heritage Financial is expected to generate 0.46 times more return on investment than Standard Bank. However, Community Heritage Financial is 2.15 times less risky than Standard Bank. It trades about 0.1 of its potential returns per unit of risk. Standard Bank Group is currently generating about 0.04 per unit of risk. If you would invest 2,094 in Community Heritage Financial on August 28, 2024 and sell it today you would earn a total of 106.00 from holding Community Heritage Financial or generate 5.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.88% |
| Values | Daily Returns |
Community Heritage Financial vs. Standard Bank Group
Performance |
| Timeline |
| Community Heritage |
| Standard Bank Group |
Community Heritage and Standard Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community Heritage and Standard Bank
The main advantage of trading using opposite Community Heritage and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community Heritage position performs unexpectedly, Standard 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 Standard Bank will offset losses from the drop in Standard Bank's long position.| Community Heritage vs. Washington Business Bank | Community Heritage vs. National Capital Bank | Community Heritage vs. Citizens Financial Corp | Community Heritage vs. North Dallas Bank |
| Standard Bank vs. Bank Central Asia | Standard Bank vs. Nedbank Group | Standard Bank vs. Kasikornbank Public Co | Standard Bank vs. KBC Groep NV |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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