Correlation Between Woodlands Financial and Standard Bank
Can any of the company-specific risk be diversified away by investing in both Woodlands Financial 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 Woodlands Financial and Standard Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woodlands Financial Services and Standard Bank Group, you can compare the effects of market volatilities on Woodlands Financial 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 Woodlands Financial with a short position of Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woodlands Financial and Standard Bank.
Diversification Opportunities for Woodlands Financial and Standard Bank
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Woodlands and Standard is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Woodlands Financial Services 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 Woodlands Financial 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 Woodlands Financial Services 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 Woodlands Financial i.e., Woodlands Financial and Standard Bank go up and down completely randomly.
Pair Corralation between Woodlands Financial and Standard Bank
Given the investment horizon of 90 days Woodlands Financial Services is expected to under-perform the Standard Bank. In addition to that, Woodlands Financial is 1.25 times more volatile than Standard Bank Group. It trades about -0.09 of its total potential returns per unit of risk. Standard Bank Group is currently generating about -0.06 per unit of volatility. If you would invest 1,380 in Standard Bank Group on August 28, 2024 and sell it today you would lose (26.00) from holding Standard Bank Group or give up 1.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Woodlands Financial Services vs. Standard Bank Group
Performance |
| Timeline |
| Woodlands Financial |
| Standard Bank Group |
Woodlands Financial and Standard Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Woodlands Financial and Standard Bank
The main advantage of trading using opposite Woodlands Financial and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woodlands Financial 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.The idea behind Woodlands Financial Services and Standard Bank Group 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.| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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