Correlation Between UNITED BANK and MEYER PLC

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

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

Diversification Opportunities for UNITED BANK and MEYER PLC

0.36

Correlation Coefficient

UNITED BANK  MEYER PLC

Weak diversification

The 3 months correlation between UNITED and MEYER is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding UNITED BANK FOR and MEYER PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEYER PLC and UNITED 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 UNITED BANK FOR are associated (or correlated) with MEYER PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEYER PLC has no effect on the direction of UNITED BANK i.e., UNITED BANK and MEYER PLC go up and down completely randomly.

Pair Corralation between UNITED BANK and MEYER PLC

Assuming the 90 days trading horizon UNITED BANK FOR is expected to generate 1.18 times more return on investment than MEYER PLC. However, UNITED BANK is 1.18 times more volatile than MEYER PLC. It trades about 0.18 of its potential returns per unit of risk. MEYER PLC is currently generating about 0.17 per unit of risk. If you would invest  2,370  in UNITED BANK FOR on September 13, 2024 and sell it today you would earn a total of  935.00  from holding UNITED BANK FOR or generate 39.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

UNITED BANK FOR  vs.  MEYER PLC

UNITED BANK FOR

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UNITED BANK FOR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, UNITED BANK unveiled solid returns over the last few months and may actually be approaching a breakup point.

MEYER PLC

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MEYER PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, MEYER PLC showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UNITED BANK and MEYER PLC

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

The idea behind UNITED BANK FOR and MEYER 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.