Correlation Between United Bank and Egyptian Gulf
Can any of the company-specific risk be diversified away by investing in both United Bank and Egyptian Gulf 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 Egyptian Gulf into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The United Bank and Egyptian Gulf Bank, you can compare the effects of market volatilities on United Bank and Egyptian Gulf 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 Egyptian Gulf. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Bank and Egyptian Gulf.
Diversification Opportunities for United Bank and Egyptian Gulf
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and Egyptian is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding The United Bank and Egyptian Gulf Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Egyptian Gulf Bank 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 The United Bank are associated (or correlated) with Egyptian Gulf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Egyptian Gulf Bank has no effect on the direction of United Bank i.e., United Bank and Egyptian Gulf go up and down completely randomly.
Pair Corralation between United Bank and Egyptian Gulf
Assuming the 90 days trading horizon United Bank is expected to generate 18.4 times less return on investment than Egyptian Gulf. But when comparing it to its historical volatility, The United Bank is 34.8 times less risky than Egyptian Gulf. It trades about 0.29 of its potential returns per unit of risk. Egyptian Gulf Bank is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 27.00 in Egyptian Gulf Bank on November 4, 2024 and sell it today you would earn a total of 1.00 from holding Egyptian Gulf Bank or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
The United Bank vs. Egyptian Gulf Bank
Performance |
| Timeline |
| United Bank |
| Egyptian Gulf Bank |
United Bank and Egyptian Gulf Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Bank and Egyptian Gulf
The main advantage of trading using opposite United Bank and Egyptian Gulf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Bank position performs unexpectedly, Egyptian Gulf 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 Egyptian Gulf will offset losses from the drop in Egyptian Gulf's long position.| United Bank vs. Commercial International Bank Egypt | United Bank vs. Reacap Financial Investments | United Bank vs. Cairo Oils Soap | United Bank vs. QALA For Financial |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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