Correlation Between Investec PLC and Standard Bank
Can any of the company-specific risk be diversified away by investing in both Investec PLC 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 Investec PLC and Standard Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investec PLC and Standard Bank Group, you can compare the effects of market volatilities on Investec PLC 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 Investec PLC with a short position of Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec PLC and Standard Bank.
Diversification Opportunities for Investec PLC and Standard Bank
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Investec and Standard is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Investec PLC 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 Investec PLC 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 PLC 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 Investec PLC i.e., Investec PLC and Standard Bank go up and down completely randomly.
Pair Corralation between Investec PLC and Standard Bank
Assuming the 90 days trading horizon Investec PLC is expected to under-perform the Standard Bank. But the stock apears to be less risky and, when comparing its historical volatility, Investec PLC is 1.23 times less risky than Standard Bank. The stock trades about -0.19 of its potential returns per unit of risk. The Standard Bank Group is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 920,000 in Standard Bank Group on September 4, 2024 and sell it today you would earn a total of 22,400 from holding Standard Bank Group or generate 2.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investec PLC vs. Standard Bank Group
Performance |
| Timeline |
| Investec PLC |
| Standard Bank Group |
Investec PLC and Standard Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investec PLC and Standard Bank
The main advantage of trading using opposite Investec PLC and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec PLC 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.| Investec PLC vs. Standard Bank Group | Investec PLC vs. ABSA Bank Limited | Investec PLC vs. African Media Entertainment | Investec PLC vs. Allied Electronics |
| Standard Bank vs. Investec Limited NON | Standard Bank vs. Sasol Ltd Bee | Standard Bank vs. Centaur Bci Balanced | Standard Bank vs. Sabvest Capital |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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