Correlation Between Traditions Bank and Standard Bank
Can any of the company-specific risk be diversified away by investing in both Traditions 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 Traditions 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 Traditions Bank and Standard Bank Group, you can compare the effects of market volatilities on Traditions 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 Traditions Bank with a short position of Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Traditions Bank and Standard Bank.
Diversification Opportunities for Traditions Bank and Standard Bank
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Traditions and Standard is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Traditions Bank 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 Traditions 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 Traditions Bank 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 Traditions Bank i.e., Traditions Bank and Standard Bank go up and down completely randomly.
Pair Corralation between Traditions Bank and Standard Bank
Given the investment horizon of 90 days Traditions Bank is expected to generate 2.86 times more return on investment than Standard Bank. However, Traditions Bank is 2.86 times more volatile than Standard Bank Group. It trades about 0.21 of its potential returns per unit of risk. Standard Bank Group is currently generating about -0.08 per unit of risk. If you would invest 2,943 in Traditions Bank on August 29, 2024 and sell it today you would earn a total of 556.00 from holding Traditions Bank or generate 18.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Traditions Bank vs. Standard Bank Group
Performance |
| Timeline |
| Traditions Bank |
| Standard Bank Group |
Traditions Bank and Standard Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Traditions Bank and Standard Bank
The main advantage of trading using opposite Traditions Bank and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Traditions 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.| Traditions Bank vs. Israel Discount Bank | Traditions Bank vs. Baraboo Bancorporation | Traditions Bank vs. Danske Bank AS | Traditions Bank vs. Jyske Bank AS |
| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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