Correlation Between ZENITH BANK and C I

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

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

Diversification Opportunities for ZENITH BANK and C I

-0.09

Correlation Coefficient

ZENITH BANK  C I

Good diversification

The 3 months correlation between ZENITH and CILEASING is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding ZENITH BANK PLC and C I LEASING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C I LEASING and ZENITH 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 ZENITH BANK PLC are associated (or correlated) with C I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C I LEASING has no effect on the direction of ZENITH BANK i.e., ZENITH BANK and C I go up and down completely randomly.

Pair Corralation between ZENITH BANK and C I

Assuming the 90 days trading horizon ZENITH BANK PLC is expected to generate 0.37 times more return on investment than C I. However, ZENITH BANK PLC is 2.73 times less risky than C I. It trades about 0.17 of its potential returns per unit of risk. C I LEASING is currently generating about 0.01 per unit of risk. If you would invest  3,800  in ZENITH BANK PLC on September 13, 2024 and sell it today you would earn a total of  610.00  from holding ZENITH BANK PLC or generate 16.05% return on investment over 90 days.

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

ZENITH BANK PLC  vs.  C I LEASING

ZENITH BANK PLC

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ZENITH BANK PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, ZENITH BANK sustained solid returns over the last few months and may actually be approaching a breakup point.

C I LEASING

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in C I LEASING are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, C I is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ZENITH BANK and C I

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

The idea behind ZENITH BANK PLC and C I LEASING 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.