Correlation Between Nedbank and Wilson Bayly

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

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

Diversification Opportunities for Nedbank and Wilson Bayly

0.47

Correlation Coefficient

Nedbank  Wilson Bayly

Very weak diversification

The 3 months correlation between Nedbank and Wilson is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nedbank Group and Wilson Bayly Holmes in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilson Bayly Holmes and Nedbank 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 Nedbank Group are associated (or correlated) with Wilson Bayly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilson Bayly Holmes has no effect on the direction of Nedbank i.e., Nedbank and Wilson Bayly go up and down completely randomly.

Pair Corralation between Nedbank and Wilson Bayly

Assuming the 90 days trading horizon Nedbank Group is expected to generate 0.65 times more return on investment than Wilson Bayly. However, Nedbank Group is 1.53 times less risky than Wilson Bayly. It trades about -0.1 of its potential returns per unit of risk. Wilson Bayly Holmes is currently generating about -0.1 per unit of risk. If you would invest  2,844,800  in Nedbank Group on December 22, 2024 and sell it today you would lose (252,500) from holding Nedbank Group or give up 8.88% of portfolio value over 90 days.

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

Nedbank Group  vs.  Wilson Bayly Holmes

Nedbank Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nedbank Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Wilson Bayly Holmes

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Nedbank and Wilson Bayly

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

The idea behind Nedbank Group and Wilson Bayly Holmes 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.