Correlation Between Harbor Bankshares and Standard Bank
Can any of the company-specific risk be diversified away by investing in both Harbor Bankshares 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 Harbor Bankshares and Standard Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harbor Bankshares and Standard Bank Group, you can compare the effects of market volatilities on Harbor Bankshares 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 Harbor Bankshares with a short position of Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbor Bankshares and Standard Bank.
Diversification Opportunities for Harbor Bankshares and Standard Bank
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Harbor and Standard is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Harbor Bankshares 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 Harbor Bankshares 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 Harbor Bankshares 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 Harbor Bankshares i.e., Harbor Bankshares and Standard Bank go up and down completely randomly.
Pair Corralation between Harbor Bankshares and Standard Bank
Given the investment horizon of 90 days Harbor Bankshares is expected to generate 1.28 times more return on investment than Standard Bank. However, Harbor Bankshares is 1.28 times more volatile than Standard Bank Group. It trades about 0.06 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 1,305 in Harbor Bankshares on August 28, 2024 and sell it today you would earn a total of 95.00 from holding Harbor Bankshares or generate 7.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harbor Bankshares vs. Standard Bank Group
Performance |
| Timeline |
| Harbor Bankshares |
| Standard Bank Group |
Harbor Bankshares and Standard Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harbor Bankshares and Standard Bank
The main advantage of trading using opposite Harbor Bankshares and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harbor Bankshares 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.The idea behind Harbor Bankshares and Standard Bank Group 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.| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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