Correlation Between INDUSTRIAL MEDICAL and FIDELITY BANK

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

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

Diversification Opportunities for INDUSTRIAL MEDICAL and FIDELITY BANK

0.33

Correlation Coefficient

INDUSTRIAL MEDICAL  FIDELITY BANK

Weak diversification

The 3 months correlation between INDUSTRIAL and FIDELITY is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding INDUSTRIAL MEDICAL GASES and FIDELITY BANK PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIDELITY BANK PLC and INDUSTRIAL MEDICAL 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 INDUSTRIAL MEDICAL GASES are associated (or correlated) with FIDELITY BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIDELITY BANK PLC has no effect on the direction of INDUSTRIAL MEDICAL i.e., INDUSTRIAL MEDICAL and FIDELITY BANK go up and down completely randomly.

Pair Corralation between INDUSTRIAL MEDICAL and FIDELITY BANK

Assuming the 90 days trading horizon INDUSTRIAL MEDICAL is expected to generate 83.38 times less return on investment than FIDELITY BANK. But when comparing it to its historical volatility, INDUSTRIAL MEDICAL GASES is 146.17 times less risky than FIDELITY BANK. It trades about 0.13 of its potential returns per unit of risk. FIDELITY BANK PLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,730  in FIDELITY BANK PLC on December 28, 2024 and sell it today you would earn a total of  170.00  from holding FIDELITY BANK PLC or generate 9.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

INDUSTRIAL MEDICAL GASES  vs.  FIDELITY BANK PLC

INDUSTRIAL MEDICAL GASES

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INDUSTRIAL MEDICAL GASES are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, INDUSTRIAL MEDICAL is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

FIDELITY BANK PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FIDELITY BANK PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental drivers, FIDELITY BANK may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with INDUSTRIAL MEDICAL and FIDELITY BANK

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

The idea behind INDUSTRIAL MEDICAL GASES and FIDELITY 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..