Correlation Between UNITED BANK and WEMA BANK
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By analyzing existing cross correlation between UNITED BANK FOR and WEMA BANK PLC, you can compare the effects of market volatilities on UNITED BANK and WEMA 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 UNITED BANK with a short position of WEMA BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED BANK and WEMA BANK.
Diversification Opportunities for UNITED BANK and WEMA BANK
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between UNITED and WEMA is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding UNITED BANK FOR and WEMA BANK PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WEMA BANK PLC 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 WEMA BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WEMA BANK PLC has no effect on the direction of UNITED BANK i.e., UNITED BANK and WEMA BANK go up and down completely randomly.
Pair Corralation between UNITED BANK and WEMA BANK
Assuming the 90 days trading horizon UNITED BANK is expected to generate 1.33 times less return on investment than WEMA BANK. But when comparing it to its historical volatility, UNITED BANK FOR is 1.06 times less risky than WEMA BANK. It trades about 0.06 of its potential returns per unit of risk. WEMA BANK PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 496.00 in WEMA BANK PLC on September 2, 2024 and sell it today you would earn a total of 379.00 from holding WEMA BANK PLC or generate 76.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED BANK FOR vs. WEMA BANK PLC
Performance |
| Timeline |
| UNITED BANK FOR |
| WEMA BANK PLC |
UNITED BANK and WEMA BANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED BANK and WEMA BANK
The main advantage of trading using opposite UNITED BANK and WEMA BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED BANK position performs unexpectedly, WEMA 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 WEMA BANK will offset losses from the drop in WEMA BANK's long position.The idea behind UNITED BANK FOR and WEMA BANK PLC 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.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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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