Correlation Between VFD GROUP and FIDELITY BANK

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

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

Diversification Opportunities for VFD GROUP and FIDELITY BANK

-0.21

Correlation Coefficient

VFD GROUP  FIDELITY BANK

Very good diversification

The 3 months correlation between VFD and FIDELITY is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding VFD GROUP and FIDELITY BANK PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIDELITY BANK PLC and VFD GROUP 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 VFD GROUP are associated (or correlated) with FIDELITY BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIDELITY BANK PLC has no effect on the direction of VFD GROUP i.e., VFD GROUP and FIDELITY BANK go up and down completely randomly.

Pair Corralation between VFD GROUP and FIDELITY BANK

Assuming the 90 days trading horizon VFD GROUP is expected to under-perform the FIDELITY BANK. But the stock apears to be less risky and, when comparing its historical volatility, VFD GROUP is 35.92 times less risky than FIDELITY BANK. The stock trades about -0.24 of its potential returns per unit of risk. The FIDELITY BANK PLC is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  1,550  in FIDELITY BANK PLC on October 9, 2024 and sell it today you would earn a total of  190.00  from holding FIDELITY BANK PLC or generate 12.26% return on investment over 90 days.

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

VFD GROUP  vs.  FIDELITY BANK PLC

VFD GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VFD GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VFD GROUP is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

FIDELITY BANK PLC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FIDELITY BANK PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating fundamental drivers, FIDELITY BANK unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VFD GROUP and FIDELITY BANK

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

The idea behind VFD GROUP and FIDELITY BANK 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.