Correlation Between CORONATION INSURANCE and UNITED BANK
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By analyzing existing cross correlation between CORONATION INSURANCE PLC and UNITED BANK FOR, you can compare the effects of market volatilities on CORONATION INSURANCE and UNITED 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 CORONATION INSURANCE with a short position of UNITED BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of CORONATION INSURANCE and UNITED BANK.
Diversification Opportunities for CORONATION INSURANCE and UNITED BANK
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CORONATION and UNITED is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding CORONATION INSURANCE PLC and UNITED BANK FOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED BANK FOR and CORONATION INSURANCE 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 CORONATION INSURANCE PLC are associated (or correlated) with UNITED BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED BANK FOR has no effect on the direction of CORONATION INSURANCE i.e., CORONATION INSURANCE and UNITED BANK go up and down completely randomly.
Pair Corralation between CORONATION INSURANCE and UNITED BANK
Assuming the 90 days trading horizon CORONATION INSURANCE PLC is expected to generate 1.15 times more return on investment than UNITED BANK. However, CORONATION INSURANCE is 1.15 times more volatile than UNITED BANK FOR. It trades about 0.06 of its potential returns per unit of risk. UNITED BANK FOR is currently generating about 0.06 per unit of risk. If you would invest 71.00 in CORONATION INSURANCE PLC on September 2, 2024 and sell it today you would earn a total of 32.00 from holding CORONATION INSURANCE PLC or generate 45.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
CORONATION INSURANCE PLC vs. UNITED BANK FOR
Performance |
| Timeline |
| CORONATION INSURANCE PLC |
| UNITED BANK FOR |
CORONATION INSURANCE and UNITED BANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CORONATION INSURANCE and UNITED BANK
The main advantage of trading using opposite CORONATION INSURANCE and UNITED BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CORONATION INSURANCE position performs unexpectedly, UNITED 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 UNITED BANK will offset losses from the drop in UNITED BANK's long position.The idea behind CORONATION INSURANCE PLC and UNITED BANK FOR 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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