Correlation Between MAGHREBAIL and CFG BANK

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

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

Diversification Opportunities for MAGHREBAIL and CFG BANK

-0.49

Correlation Coefficient

MAGHREBAIL  CFG BANK

Very good diversification

The 3 months correlation between MAGHREBAIL and CFG is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding MAGHREBAIL and CFG BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CFG BANK and MAGHREBAIL 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 MAGHREBAIL are associated (or correlated) with CFG BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CFG BANK has no effect on the direction of MAGHREBAIL i.e., MAGHREBAIL and CFG BANK go up and down completely randomly.

Pair Corralation between MAGHREBAIL and CFG BANK

Assuming the 90 days trading horizon MAGHREBAIL is expected to generate 0.95 times more return on investment than CFG BANK. However, MAGHREBAIL is 1.06 times less risky than CFG BANK. It trades about 0.12 of its potential returns per unit of risk. CFG BANK is currently generating about -0.03 per unit of risk. If you would invest  91,500  in MAGHREBAIL on December 3, 2024 and sell it today you would earn a total of  2,500  from holding MAGHREBAIL or generate 2.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

MAGHREBAIL  vs.  CFG BANK

MAGHREBAIL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MAGHREBAIL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, MAGHREBAIL is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

CFG BANK

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CFG BANK are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental drivers, CFG BANK displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MAGHREBAIL and CFG BANK

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

The idea behind MAGHREBAIL and CFG 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.