Correlation Between UNITED BANK and C I

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Can any of the company-specific risk be diversified away by investing in both UNITED BANK and C I 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 UNITED BANK and C I into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED BANK FOR and C I LEASING, you can compare the effects of market volatilities on UNITED BANK and C I 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 UNITED BANK with a short position of C I. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED BANK and C I.

Diversification Opportunities for UNITED BANK and C I

0.56
  Correlation Coefficient
 C I

Very weak diversification

The 3 months correlation between UNITED and CILEASING is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding UNITED BANK FOR and C I LEASING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C I LEASING and UNITED 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 UNITED BANK FOR are associated (or correlated) with C I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C I LEASING has no effect on the direction of UNITED BANK i.e., UNITED BANK and C I go up and down completely randomly.

Pair Corralation between UNITED BANK and C I

Assuming the 90 days trading horizon UNITED BANK FOR is expected to generate 0.76 times more return on investment than C I. However, UNITED BANK FOR is 1.32 times less risky than C I. It trades about 0.09 of its potential returns per unit of risk. C I LEASING is currently generating about 0.03 per unit of risk. If you would invest  1,345  in UNITED BANK FOR on October 24, 2024 and sell it today you would earn a total of  2,055  from holding UNITED BANK FOR or generate 152.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

UNITED BANK FOR  vs.  C I LEASING

 Performance 
       Timeline  
UNITED BANK FOR 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in UNITED BANK FOR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, UNITED BANK unveiled solid returns over the last few months and may actually be approaching a breakup point.
C I LEASING 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in C I LEASING are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, C I demonstrated solid returns over the last few months and may actually be approaching a breakup point.

UNITED BANK and C I Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with UNITED BANK and C I

The main advantage of trading using opposite UNITED BANK and C I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED BANK position performs unexpectedly, C I 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 C I will offset losses from the drop in C I's long position.
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The idea behind UNITED BANK FOR and C I LEASING pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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