Correlation Between Investec and Capitec Bank
Can any of the company-specific risk be diversified away by investing in both Investec and Capitec 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 Investec and Capitec Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investec and Capitec Bank Holdings, you can compare the effects of market volatilities on Investec and Capitec 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 Investec with a short position of Capitec Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec and Capitec Bank.
Diversification Opportunities for Investec and Capitec Bank
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Investec and Capitec is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Investec and Capitec Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitec Bank Holdings and Investec 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 Investec are associated (or correlated) with Capitec Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitec Bank Holdings has no effect on the direction of Investec i.e., Investec and Capitec Bank go up and down completely randomly.
Pair Corralation between Investec and Capitec Bank
Assuming the 90 days trading horizon Investec is expected to generate 1.06 times more return on investment than Capitec Bank. However, Investec is 1.06 times more volatile than Capitec Bank Holdings. It trades about 0.04 of its potential returns per unit of risk. Capitec Bank Holdings is currently generating about 0.02 per unit of risk. If you would invest 1,217,864 in Investec on September 1, 2024 and sell it today you would earn a total of 67,436 from holding Investec or generate 5.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Investec vs. Capitec Bank Holdings
Performance |
| Timeline |
| Investec |
| Capitec Bank Holdings |
Investec and Capitec Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec and Capitec Bank
The main advantage of trading using opposite Investec and Capitec Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec position performs unexpectedly, Capitec 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 Capitec Bank will offset losses from the drop in Capitec Bank's long position.| Investec vs. ABSA Bank Limited | Investec vs. Capitec Bank Holdings | Investec vs. Standard Bank Group | Investec vs. Absa Group |
| Capitec Bank vs. ABSA Bank Limited | Capitec Bank vs. Capitec Bank Holdings | Capitec Bank vs. Standard Bank Group | Capitec Bank vs. Absa Group |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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