Correlation Between National Bank and Standard Bank
Can any of the company-specific risk be diversified away by investing in both National Bank 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 National Bank and Standard Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank of and Standard Bank Group, you can compare the effects of market volatilities on National Bank 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 National Bank with a short position of Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Standard Bank.
Diversification Opportunities for National Bank and Standard Bank
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between National and Standard is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of 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 National 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 National Bank of 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 National Bank i.e., National Bank and Standard Bank go up and down completely randomly.
Pair Corralation between National Bank and Standard Bank
Assuming the 90 days horizon National Bank of is expected to under-perform the Standard Bank. In addition to that, National Bank is 1.61 times more volatile than Standard Bank Group. It trades about -0.17 of its total potential returns per unit of risk. Standard Bank Group is currently generating about -0.08 per unit of volatility. If you would invest 1,380 in Standard Bank Group on August 29, 2024 and sell it today you would lose (37.00) from holding Standard Bank Group or give up 2.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
National Bank of vs. Standard Bank Group
Performance |
| Timeline |
| National Bank |
| Standard Bank Group |
National Bank and Standard Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Standard Bank
The main advantage of trading using opposite National Bank and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank 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.| National Bank vs. Alpha Bank SA | National Bank vs. Eurobank Ergasias SA | National Bank vs. Piraeus Bank SA | National Bank vs. PT Bank Central |
| 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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