Correlation Between CUSTODIAN INVESTMENT and ECOBANK TRANSNATIONAL

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

By analyzing existing cross correlation between CUSTODIAN INVESTMENT PLC and ECOBANK TRANSNATIONAL INCORPORATED, you can compare the effects of market volatilities on CUSTODIAN INVESTMENT and ECOBANK TRANSNATIONAL 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 CUSTODIAN INVESTMENT with a short position of ECOBANK TRANSNATIONAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of CUSTODIAN INVESTMENT and ECOBANK TRANSNATIONAL.

Diversification Opportunities for CUSTODIAN INVESTMENT and ECOBANK TRANSNATIONAL

-0.48

Correlation Coefficient

CUSTODIAN INVESTMENT  ECOBANK TRANSNATIONAL

Very good diversification

The 3 months correlation between CUSTODIAN and ECOBANK is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding CUSTODIAN INVESTMENT PLC and ECOBANK TRANSNATIONAL INCORPOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECOBANK TRANSNATIONAL and CUSTODIAN INVESTMENT 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 CUSTODIAN INVESTMENT PLC are associated (or correlated) with ECOBANK TRANSNATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECOBANK TRANSNATIONAL has no effect on the direction of CUSTODIAN INVESTMENT i.e., CUSTODIAN INVESTMENT and ECOBANK TRANSNATIONAL go up and down completely randomly.

Pair Corralation between CUSTODIAN INVESTMENT and ECOBANK TRANSNATIONAL

Assuming the 90 days trading horizon CUSTODIAN INVESTMENT PLC is expected to under-perform the ECOBANK TRANSNATIONAL. In addition to that, CUSTODIAN INVESTMENT is 2.54 times more volatile than ECOBANK TRANSNATIONAL INCORPORATED. It trades about -0.01 of its total potential returns per unit of risk. ECOBANK TRANSNATIONAL INCORPORATED is currently generating about 0.12 per unit of volatility. If you would invest  2,375  in ECOBANK TRANSNATIONAL INCORPORATED on September 13, 2024 and sell it today you would earn a total of  175.00  from holding ECOBANK TRANSNATIONAL INCORPORATED or generate 7.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CUSTODIAN INVESTMENT PLC  vs.  ECOBANK TRANSNATIONAL INCORPOR

CUSTODIAN INVESTMENT PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CUSTODIAN INVESTMENT PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, CUSTODIAN INVESTMENT is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

ECOBANK TRANSNATIONAL

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ECOBANK TRANSNATIONAL INCORPORATED are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, ECOBANK TRANSNATIONAL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CUSTODIAN INVESTMENT and ECOBANK TRANSNATIONAL

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

The idea behind CUSTODIAN INVESTMENT PLC and ECOBANK TRANSNATIONAL INCORPORATED 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.