Correlation Between MAENDELEO BANK and NATIONAL MICROFINANCE
Can any of the company-specific risk be diversified away by investing in both MAENDELEO BANK and NATIONAL MICROFINANCE 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 MAENDELEO BANK and NATIONAL MICROFINANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAENDELEO BANK PLC and NATIONAL MICROFINANCE BANK, you can compare the effects of market volatilities on MAENDELEO BANK and NATIONAL MICROFINANCE 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 MAENDELEO BANK with a short position of NATIONAL MICROFINANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAENDELEO BANK and NATIONAL MICROFINANCE.
Diversification Opportunities for MAENDELEO BANK and NATIONAL MICROFINANCE
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between MAENDELEO and NATIONAL is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding MAENDELEO BANK PLC and NATIONAL MICROFINANCE BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL MICROFINANCE and MAENDELEO 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 MAENDELEO BANK PLC are associated (or correlated) with NATIONAL MICROFINANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATIONAL MICROFINANCE has no effect on the direction of MAENDELEO BANK i.e., MAENDELEO BANK and NATIONAL MICROFINANCE go up and down completely randomly.
Pair Corralation between MAENDELEO BANK and NATIONAL MICROFINANCE
If you would invest 535,000 in NATIONAL MICROFINANCE BANK on November 4, 2024 and sell it today you would earn a total of 50,000 from holding NATIONAL MICROFINANCE BANK or generate 9.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
MAENDELEO BANK PLC vs. NATIONAL MICROFINANCE BANK
Performance |
| Timeline |
| MAENDELEO BANK PLC |
| NATIONAL MICROFINANCE |
MAENDELEO BANK and NATIONAL MICROFINANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAENDELEO BANK and NATIONAL MICROFINANCE
The main advantage of trading using opposite MAENDELEO BANK and NATIONAL MICROFINANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAENDELEO BANK position performs unexpectedly, NATIONAL MICROFINANCE 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 MICROFINANCE will offset losses from the drop in NATIONAL MICROFINANCE's long position.| MAENDELEO BANK vs. YETU MICROFINANCE PLC | MAENDELEO BANK vs. CRDB BANK LTD | MAENDELEO BANK vs. NATION MEDIA GROUP | MAENDELEO BANK vs. MWALIMU MERCIAL BANK |
| NATIONAL MICROFINANCE vs. YETU MICROFINANCE PLC | NATIONAL MICROFINANCE vs. CRDB BANK LTD | NATIONAL MICROFINANCE vs. NATION MEDIA GROUP | NATIONAL MICROFINANCE vs. MWALIMU MERCIAL BANK |
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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