Correlation Between Community Bankers and Standard Bank
Can any of the company-specific risk be diversified away by investing in both Community Bankers 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 Bankers 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 Bankers and Standard Bank Group, you can compare the effects of market volatilities on Community Bankers 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 Bankers with a short position of Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Community Bankers and Standard Bank.
Diversification Opportunities for Community Bankers and Standard Bank
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Community and Standard is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Community Bankers 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 Bankers 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 Bankers 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 Bankers i.e., Community Bankers and Standard Bank go up and down completely randomly.
Pair Corralation between Community Bankers and Standard Bank
Given the investment horizon of 90 days Community Bankers is expected to generate 0.3 times more return on investment than Standard Bank. However, Community Bankers is 3.3 times less risky than Standard Bank. It trades about 0.19 of its potential returns per unit of risk. Standard Bank Group is currently generating about 0.01 per unit of risk. If you would invest 470.00 in Community Bankers on August 25, 2024 and sell it today you would earn a total of 9.00 from holding Community Bankers or generate 1.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Community Bankers vs. Standard Bank Group
Performance |
| Timeline |
| Community Bankers |
| Standard Bank Group |
Community Bankers and Standard Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Community Bankers and Standard Bank
The main advantage of trading using opposite Community Bankers and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Community Bankers 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 Bankers vs. Standard Bank Group | Community Bankers vs. Bank Central Asia | Community Bankers vs. PSB Holdings | Community Bankers vs. United Overseas 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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