Correlation Between FDH BANK and NATIONAL INVESTMENT
Can any of the company-specific risk be diversified away by investing in both FDH BANK and NATIONAL INVESTMENT 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 FDH BANK and NATIONAL INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FDH BANK PLC and NATIONAL INVESTMENT TRUST, you can compare the effects of market volatilities on FDH BANK and NATIONAL INVESTMENT 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 FDH BANK with a short position of NATIONAL INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of FDH BANK and NATIONAL INVESTMENT.
Diversification Opportunities for FDH BANK and NATIONAL INVESTMENT
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FDH and NATIONAL is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding FDH BANK PLC and NATIONAL INVESTMENT TRUST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL INVESTMENT TRUST and FDH BANK 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 FDH BANK PLC are associated (or correlated) with NATIONAL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATIONAL INVESTMENT TRUST has no effect on the direction of FDH BANK i.e., FDH BANK and NATIONAL INVESTMENT go up and down completely randomly.
Pair Corralation between FDH BANK and NATIONAL INVESTMENT
Assuming the 90 days trading horizon FDH BANK PLC is expected to under-perform the NATIONAL INVESTMENT. In addition to that, FDH BANK is 6.55 times more volatile than NATIONAL INVESTMENT TRUST. It trades about -0.13 of its total potential returns per unit of risk. NATIONAL INVESTMENT TRUST is currently generating about -0.01 per unit of volatility. If you would invest 40,994 in NATIONAL INVESTMENT TRUST on August 30, 2024 and sell it today you would lose (1.00) from holding NATIONAL INVESTMENT TRUST or give up 0.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FDH BANK PLC vs. NATIONAL INVESTMENT TRUST
Performance |
| Timeline |
| FDH BANK PLC |
| NATIONAL INVESTMENT TRUST |
FDH BANK and NATIONAL INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FDH BANK and NATIONAL INVESTMENT
The main advantage of trading using opposite FDH BANK and NATIONAL INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FDH BANK position performs unexpectedly, NATIONAL INVESTMENT 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 NATIONAL INVESTMENT will offset losses from the drop in NATIONAL INVESTMENT's long position.| FDH BANK vs. NBS BANK LIMITED | FDH BANK vs. MALAWI PROPERTY INVESTMENT | FDH BANK vs. NICO HOLDINGS LIMITED | FDH BANK vs. BLANTYRE HOTELS LIMITED |
| NATIONAL INVESTMENT vs. MALAWI PROPERTY INVESTMENT | NATIONAL INVESTMENT vs. BLANTYRE HOTELS LIMITED | NATIONAL INVESTMENT vs. NATIONAL BANK OF | NATIONAL INVESTMENT vs. FDH BANK PLC |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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