Correlation Between VETIVA BANKING and GOLDEN GUINEA

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

By analyzing existing cross correlation between VETIVA BANKING ETF and GOLDEN GUINEA BREWERIES, you can compare the effects of market volatilities on VETIVA BANKING and GOLDEN GUINEA 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 VETIVA BANKING with a short position of GOLDEN GUINEA. Check out your portfolio center. Please also check ongoing floating volatility patterns of VETIVA BANKING and GOLDEN GUINEA.

Diversification Opportunities for VETIVA BANKING and GOLDEN GUINEA

0.57

Correlation Coefficient

VETIVA BANKING  GOLDEN GUINEA

Very weak diversification

The 3 months correlation between VETIVA and GOLDEN is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding VETIVA BANKING ETF and GOLDEN GUINEA BREWERIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOLDEN GUINEA BREWERIES and VETIVA BANKING 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 VETIVA BANKING ETF are associated (or correlated) with GOLDEN GUINEA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOLDEN GUINEA BREWERIES has no effect on the direction of VETIVA BANKING i.e., VETIVA BANKING and GOLDEN GUINEA go up and down completely randomly.

Pair Corralation between VETIVA BANKING and GOLDEN GUINEA

Assuming the 90 days trading horizon VETIVA BANKING is expected to generate 6.86 times less return on investment than GOLDEN GUINEA. But when comparing it to its historical volatility, VETIVA BANKING ETF is 3.22 times less risky than GOLDEN GUINEA. It trades about 0.2 of its potential returns per unit of risk. GOLDEN GUINEA BREWERIES is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest  315.00  in GOLDEN GUINEA BREWERIES on September 14, 2024 and sell it today you would earn a total of  473.00  from holding GOLDEN GUINEA BREWERIES or generate 150.16% return on investment over 90 days.

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

VETIVA BANKING ETF  vs.  GOLDEN GUINEA BREWERIES

VETIVA BANKING ETF

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VETIVA BANKING ETF are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, VETIVA BANKING disclosed solid returns over the last few months and may actually be approaching a breakup point.

GOLDEN GUINEA BREWERIES

Risk-Adjusted Performance

33 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in GOLDEN GUINEA BREWERIES are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, GOLDEN GUINEA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VETIVA BANKING and GOLDEN GUINEA

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

The idea behind VETIVA BANKING ETF and GOLDEN GUINEA BREWERIES 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 CEOs Directory module to screen CEOs from public companies around the world.