Correlation Between WEMA BANK and ABBEY MORTGAGE

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both WEMA BANK and ABBEY MORTGAGE 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 WEMA BANK and ABBEY MORTGAGE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WEMA BANK PLC and ABBEY MORTGAGE BANK, you can compare the effects of market volatilities on WEMA BANK and ABBEY MORTGAGE 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 WEMA BANK with a short position of ABBEY MORTGAGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of WEMA BANK and ABBEY MORTGAGE.

Diversification Opportunities for WEMA BANK and ABBEY MORTGAGE

-0.23
  Correlation Coefficient

Very good diversification

The 3 months correlation between WEMA and ABBEY is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding WEMA BANK PLC and ABBEY MORTGAGE BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABBEY MORTGAGE BANK and WEMA 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 WEMA BANK PLC are associated (or correlated) with ABBEY MORTGAGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABBEY MORTGAGE BANK has no effect on the direction of WEMA BANK i.e., WEMA BANK and ABBEY MORTGAGE go up and down completely randomly.

Pair Corralation between WEMA BANK and ABBEY MORTGAGE

Assuming the 90 days trading horizon WEMA BANK is expected to generate 1.18 times less return on investment than ABBEY MORTGAGE. But when comparing it to its historical volatility, WEMA BANK PLC is 1.07 times less risky than ABBEY MORTGAGE. It trades about 0.3 of its potential returns per unit of risk. ABBEY MORTGAGE BANK is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  280.00  in ABBEY MORTGAGE BANK on October 6, 2024 and sell it today you would earn a total of  50.00  from holding ABBEY MORTGAGE BANK or generate 17.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

WEMA BANK PLC  vs.  ABBEY MORTGAGE BANK

 Performance 
       Timeline  
WEMA BANK PLC 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in WEMA BANK PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, WEMA BANK displayed solid returns over the last few months and may actually be approaching a breakup point.
ABBEY MORTGAGE BANK 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ABBEY MORTGAGE BANK are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, ABBEY MORTGAGE exhibited solid returns over the last few months and may actually be approaching a breakup point.

WEMA BANK and ABBEY MORTGAGE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with WEMA BANK and ABBEY MORTGAGE

The main advantage of trading using opposite WEMA BANK and ABBEY MORTGAGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WEMA BANK position performs unexpectedly, ABBEY MORTGAGE 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 ABBEY MORTGAGE will offset losses from the drop in ABBEY MORTGAGE's long position.
The idea behind WEMA BANK PLC and ABBEY MORTGAGE BANK 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

Other Complementary Tools

USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Bonds Directory
Find actively traded corporate debentures issued by US companies
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Global Markets Map
Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes