Correlation Between Standard Bank and Wesizwe
Can any of the company-specific risk be diversified away by investing in both Standard Bank and Wesizwe 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 Standard Bank and Wesizwe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Bank Group and Wesizwe, you can compare the effects of market volatilities on Standard Bank and Wesizwe 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 Standard Bank with a short position of Wesizwe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Bank and Wesizwe.
Diversification Opportunities for Standard Bank and Wesizwe
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Standard and Wesizwe is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Standard Bank Group and Wesizwe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesizwe and Standard 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 Standard Bank Group are associated (or correlated) with Wesizwe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesizwe has no effect on the direction of Standard Bank i.e., Standard Bank and Wesizwe go up and down completely randomly.
Pair Corralation between Standard Bank and Wesizwe
Assuming the 90 days trading horizon Standard Bank Group is expected to generate 0.42 times more return on investment than Wesizwe. However, Standard Bank Group is 2.36 times less risky than Wesizwe. It trades about 0.06 of its potential returns per unit of risk. Wesizwe is currently generating about -0.13 per unit of risk. If you would invest 920,000 in Standard Bank Group on September 5, 2024 and sell it today you would earn a total of 19,900 from holding Standard Bank Group or generate 2.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Bank Group vs. Wesizwe
Performance |
| Timeline |
| Standard Bank Group |
| Wesizwe |
Standard Bank and Wesizwe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Bank and Wesizwe
The main advantage of trading using opposite Standard Bank and Wesizwe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Bank position performs unexpectedly, Wesizwe 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 Wesizwe will offset losses from the drop in Wesizwe's long position.| Standard Bank vs. Allied Electronics | Standard Bank vs. HomeChoice Investments | Standard Bank vs. Frontier Transport Holdings | Standard Bank vs. Safari Investments RSA |
| Wesizwe vs. Glencore PLC | Wesizwe vs. Anglo American PLC | Wesizwe vs. African Rainbow Minerals | Wesizwe vs. Jubilee Platinum |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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