Correlation Between Standard Bank and Bank of Idaho

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

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

Diversification Opportunities for Standard Bank and Bank of Idaho

-0.54

Correlation Coefficient

Standard Bank  Bank of Idaho

Excellent diversification

The 3 months correlation between Standard and Bank is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Standard Bank Group and Bank of Idaho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Idaho and Standard Bank 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 Standard Bank Group are associated (or correlated) with Bank of Idaho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Idaho has no effect on the direction of Standard Bank i.e., Standard Bank and Bank of Idaho go up and down completely randomly.

Pair Corralation between Standard Bank and Bank of Idaho

Assuming the 90 days horizon Standard Bank Group is expected to generate 2.48 times more return on investment than Bank of Idaho. However, Standard Bank is 2.48 times more volatile than Bank of Idaho. It trades about 0.04 of its potential returns per unit of risk. Bank of Idaho is currently generating about 0.05 per unit of risk. If you would invest  851.00  in Standard Bank Group on October 11, 2024 and sell it today you would earn a total of  348.00  from holding Standard Bank Group or generate 40.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Standard Bank Group  vs.  Bank of Idaho

Standard Bank Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Standard Bank Group 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 essential indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bank of Idaho

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Idaho are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Bank of Idaho may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Standard Bank and Bank of Idaho

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

The idea behind Standard Bank Group and Bank of Idaho 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.

Check out your portfolio center.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.