Correlation Between Bank Utica and Investec

Can any of the company-specific risk be diversified away by investing in both Bank Utica and Investec 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 Bank Utica and Investec into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank Utica Ny and Investec Ltd ADR, you can compare the effects of market volatilities on Bank Utica and Investec 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 Bank Utica with a short position of Investec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Utica and Investec.

Diversification Opportunities for Bank Utica and Investec

-0.31

Correlation Coefficient

Bank Utica  Investec

Very good diversification

The 3 months correlation between Bank and Investec is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bank Utica Ny and Investec Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investec ADR and Bank Utica 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 Bank Utica Ny are associated (or correlated) with Investec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investec ADR has no effect on the direction of Bank Utica i.e., Bank Utica and Investec go up and down completely randomly.

Pair Corralation between Bank Utica and Investec

Assuming the 90 days horizon Bank Utica is expected to generate 2.1 times less return on investment than Investec. But when comparing it to its historical volatility, Bank Utica Ny is 1.73 times less risky than Investec. It trades about 0.04 of its potential returns per unit of risk. Investec Ltd ADR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,135  in Investec Ltd ADR on October 4, 2024 and sell it today you would earn a total of  535.00  from holding Investec Ltd ADR or generate 47.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.24%
Values	Daily Returns

Bank Utica Ny  vs.  Investec Ltd ADR

Bank Utica Ny

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Utica Ny are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Bank Utica disclosed solid returns over the last few months and may actually be approaching a breakup point.

Investec ADR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Investec Ltd ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting technical and fundamental indicators, Investec showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Utica and Investec

The main advantage of trading using opposite Bank Utica and Investec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Utica position performs unexpectedly, Investec 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 Investec will offset losses from the drop in Investec's long position.

The idea behind Bank Utica Ny and Investec Ltd ADR 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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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.