Correlation Between STERLING FINANCIAL and ZENITH BANK
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By analyzing existing cross correlation between STERLING FINANCIAL HOLDINGS and ZENITH BANK PLC, you can compare the effects of market volatilities on STERLING FINANCIAL and ZENITH 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 STERLING FINANCIAL with a short position of ZENITH BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of STERLING FINANCIAL and ZENITH BANK.
Diversification Opportunities for STERLING FINANCIAL and ZENITH BANK
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STERLING and ZENITH is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding STERLING FINANCIAL HOLDINGS and ZENITH BANK PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZENITH BANK PLC and STERLING FINANCIAL 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 STERLING FINANCIAL HOLDINGS are associated (or correlated) with ZENITH BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZENITH BANK PLC has no effect on the direction of STERLING FINANCIAL i.e., STERLING FINANCIAL and ZENITH BANK go up and down completely randomly.
Pair Corralation between STERLING FINANCIAL and ZENITH BANK
Assuming the 90 days trading horizon STERLING FINANCIAL HOLDINGS is expected to under-perform the ZENITH BANK. In addition to that, STERLING FINANCIAL is 1.72 times more volatile than ZENITH BANK PLC. It trades about -0.12 of its total potential returns per unit of risk. ZENITH BANK PLC is currently generating about 0.24 per unit of volatility. If you would invest 4,650 in ZENITH BANK PLC on November 4, 2024 and sell it today you would earn a total of 410.00 from holding ZENITH BANK PLC or generate 8.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STERLING FINANCIAL HOLDINGS vs. ZENITH BANK PLC
Performance |
| Timeline |
| STERLING FINANCIAL |
| ZENITH BANK PLC |
STERLING FINANCIAL and ZENITH BANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STERLING FINANCIAL and ZENITH BANK
The main advantage of trading using opposite STERLING FINANCIAL and ZENITH BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STERLING FINANCIAL position performs unexpectedly, ZENITH 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 ZENITH BANK will offset losses from the drop in ZENITH BANK's long position.| STERLING FINANCIAL vs. GUINEA INSURANCE PLC | STERLING FINANCIAL vs. SECURE ELECTRONIC TECHNOLOGY | STERLING FINANCIAL vs. VFD GROUP | STERLING FINANCIAL vs. IKEJA HOTELS PLC |
| ZENITH BANK vs. GUINEA INSURANCE PLC | ZENITH BANK vs. SECURE ELECTRONIC TECHNOLOGY | ZENITH BANK vs. VFD GROUP | ZENITH BANK vs. IKEJA HOTELS 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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