Correlation Between FNB Government and Centaur Bci

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

By analyzing existing cross correlation between FNB Government Inflation and Centaur Bci Balanced, you can compare the effects of market volatilities on FNB Government and Centaur Bci 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 FNB Government with a short position of Centaur Bci. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNB Government and Centaur Bci.

Diversification Opportunities for FNB Government and Centaur Bci

-0.24

Correlation Coefficient

FNB Government  Centaur Bci

Very good diversification

The 3 months correlation between FNB and Centaur is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding FNB Government Inflation and Centaur Bci Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaur Bci Balanced and FNB Government 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 FNB Government Inflation are associated (or correlated) with Centaur Bci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaur Bci Balanced has no effect on the direction of FNB Government i.e., FNB Government and Centaur Bci go up and down completely randomly.

Pair Corralation between FNB Government and Centaur Bci

Assuming the 90 days trading horizon FNB Government Inflation is expected to under-perform the Centaur Bci. But the etf apears to be less risky and, when comparing its historical volatility, FNB Government Inflation is 1.68 times less risky than Centaur Bci. The etf trades about -0.03 of its potential returns per unit of risk. The Centaur Bci Balanced is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  232.00  in Centaur Bci Balanced on September 14, 2024 and sell it today you would earn a total of  12.00  from holding Centaur Bci Balanced or generate 5.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

FNB Government Inflation  vs.  Centaur Bci Balanced

FNB Government Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FNB Government Inflation has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, FNB Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Centaur Bci Balanced

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Centaur Bci Balanced are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Centaur Bci is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FNB Government and Centaur Bci

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

The idea behind FNB Government Inflation and Centaur Bci Balanced 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.