Correlation Between Grand Investment and United Bank

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

By analyzing existing cross correlation between Grand Investment Capital and The United Bank, you can compare the effects of market volatilities on Grand Investment 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 Grand Investment with a short position of United Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grand Investment and United Bank.

Diversification Opportunities for Grand Investment and United Bank

0.04

Correlation Coefficient

Grand Investment  United Bank

Significant diversification

The 3 months correlation between Grand and United is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Grand Investment Capital and The United Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bank and Grand 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 Grand Investment Capital 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 has no effect on the direction of Grand Investment i.e., Grand Investment and United Bank go up and down completely randomly.

Pair Corralation between Grand Investment and United Bank

Assuming the 90 days trading horizon Grand Investment Capital is expected to generate 30.14 times more return on investment than United Bank. However, Grand Investment is 30.14 times more volatile than The United Bank. It trades about 0.41 of its potential returns per unit of risk. The United Bank is currently generating about 1.03 per unit of risk. If you would invest  946.00  in Grand Investment Capital on October 23, 2024 and sell it today you would earn a total of  199.00  from holding Grand Investment Capital or generate 21.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Grand Investment Capital  vs.  The United Bank

Grand Investment Capital

Risk-Adjusted Performance

18 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grand Investment Capital are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Grand Investment reported solid returns over the last few months and may actually be approaching a breakup point.

United Bank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The United Bank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, United Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Grand Investment and United Bank

The main advantage of trading using opposite Grand Investment and United Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grand Investment 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 Grand Investment Capital and The United Bank 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.