Correlation Between NATIONAL MICROFINANCE and CRDB BANK
Can any of the company-specific risk be diversified away by investing in both NATIONAL MICROFINANCE and CRDB 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 MICROFINANCE and CRDB BANK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NATIONAL MICROFINANCE BANK and CRDB BANK LTD, you can compare the effects of market volatilities on NATIONAL MICROFINANCE and CRDB 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 MICROFINANCE with a short position of CRDB BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of NATIONAL MICROFINANCE and CRDB BANK.
Diversification Opportunities for NATIONAL MICROFINANCE and CRDB BANK
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NATIONAL and CRDB is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding NATIONAL MICROFINANCE BANK and CRDB BANK LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRDB BANK LTD and NATIONAL MICROFINANCE 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 MICROFINANCE BANK are associated (or correlated) with CRDB BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRDB BANK LTD has no effect on the direction of NATIONAL MICROFINANCE i.e., NATIONAL MICROFINANCE and CRDB BANK go up and down completely randomly.
Pair Corralation between NATIONAL MICROFINANCE and CRDB BANK
Assuming the 90 days trading horizon NATIONAL MICROFINANCE BANK is expected to generate 1.52 times more return on investment than CRDB BANK. However, NATIONAL MICROFINANCE is 1.52 times more volatile than CRDB BANK LTD. It trades about 0.32 of its potential returns per unit of risk. CRDB BANK LTD is currently generating about 0.15 per unit of risk. 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 Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
NATIONAL MICROFINANCE BANK vs. CRDB BANK LTD
Performance |
| Timeline |
| NATIONAL MICROFINANCE |
| CRDB BANK LTD |
NATIONAL MICROFINANCE and CRDB BANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NATIONAL MICROFINANCE and CRDB BANK
The main advantage of trading using opposite NATIONAL MICROFINANCE and CRDB BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NATIONAL MICROFINANCE position performs unexpectedly, CRDB 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 CRDB BANK will offset losses from the drop in CRDB BANK's long position.| NATIONAL MICROFINANCE vs. YETU MICROFINANCE PLC | NATIONAL MICROFINANCE vs. CRDB BANK LTD | NATIONAL MICROFINANCE vs. NATION MEDIA GROUP | NATIONAL MICROFINANCE vs. MWALIMU MERCIAL BANK |
| CRDB BANK vs. YETU MICROFINANCE PLC | CRDB BANK vs. NATION MEDIA GROUP | CRDB BANK vs. MWALIMU MERCIAL BANK | CRDB BANK vs. AFRIPRISE INVESTMENT PLC |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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