Correlation Between GUARANTY TRUST and ZENITH BANK

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

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

Diversification Opportunities for GUARANTY TRUST and ZENITH BANK

0.0

Correlation Coefficient

GUARANTY TRUST  ZENITH BANK

Pay attention - limited upside

The 3 months correlation between GUARANTY and ZENITH is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding GUARANTY TRUST HOLDING 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 GUARANTY TRUST 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 GUARANTY TRUST HOLDING 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 GUARANTY TRUST i.e., GUARANTY TRUST and ZENITH BANK go up and down completely randomly.

Pair Corralation between GUARANTY TRUST and ZENITH BANK

If you would invest  3,745  in ZENITH BANK PLC on October 16, 2024 and sell it today you would earn a total of  940.00  from holding ZENITH BANK PLC or generate 25.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

GUARANTY TRUST HOLDING  vs.  ZENITH BANK PLC

GUARANTY TRUST HOLDING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GUARANTY TRUST HOLDING has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, GUARANTY TRUST is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

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 uncertain basic indicators, ZENITH BANK sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GUARANTY TRUST and ZENITH BANK

The main advantage of trading using opposite GUARANTY TRUST and ZENITH BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GUARANTY TRUST 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 GUARANTY TRUST HOLDING 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.