Correlation Between GREENWICH ASSET and ZENITH BANK

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

By analyzing existing cross correlation between GREENWICH ASSET ETF and ZENITH BANK PLC, you can compare the effects of market volatilities on GREENWICH ASSET and ZENITH 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 GREENWICH ASSET with a short position of ZENITH BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of GREENWICH ASSET and ZENITH BANK.

Diversification Opportunities for GREENWICH ASSET and ZENITH BANK

-0.96

Correlation Coefficient

GREENWICH ASSET  ZENITH BANK

Pay attention - limited upside

The 3 months correlation between GREENWICH and ZENITH is -0.96. Overlapping area represents the amount of risk that can be diversified away by holding GREENWICH ASSET ETF and ZENITH BANK PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZENITH BANK PLC and GREENWICH ASSET 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 GREENWICH ASSET ETF are associated (or correlated) with ZENITH BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZENITH BANK PLC has no effect on the direction of GREENWICH ASSET i.e., GREENWICH ASSET and ZENITH BANK go up and down completely randomly.

Pair Corralation between GREENWICH ASSET and ZENITH BANK

Assuming the 90 days trading horizon GREENWICH ASSET ETF is expected to under-perform the ZENITH BANK. In addition to that, GREENWICH ASSET is 4.2 times more volatile than ZENITH BANK PLC. It trades about -0.12 of its total potential returns per unit of risk. ZENITH BANK PLC is currently generating about 0.3 per unit of volatility. If you would invest  4,350  in ZENITH BANK PLC on September 28, 2024 and sell it today you would earn a total of  250.00  from holding ZENITH BANK PLC or generate 5.75% return on investment over 90 days.

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

GREENWICH ASSET ETF  vs.  ZENITH BANK PLC

GREENWICH ASSET ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GREENWICH ASSET ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ZENITH BANK PLC

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ZENITH BANK PLC are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, ZENITH BANK sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GREENWICH ASSET and ZENITH BANK

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

The idea behind GREENWICH ASSET ETF and ZENITH BANK PLC 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.