Correlation Between UNITED BANK and NEM INSURANCE
Can any of the company-specific risk be diversified away by investing in both UNITED BANK and NEM INSURANCE 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 UNITED BANK and NEM INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED BANK FOR and NEM INSURANCE PLC, you can compare the effects of market volatilities on UNITED BANK and NEM INSURANCE 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 UNITED BANK with a short position of NEM INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED BANK and NEM INSURANCE.
Diversification Opportunities for UNITED BANK and NEM INSURANCE
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between UNITED and NEM is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding UNITED BANK FOR and NEM INSURANCE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEM INSURANCE PLC and UNITED 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 UNITED BANK FOR are associated (or correlated) with NEM INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEM INSURANCE PLC has no effect on the direction of UNITED BANK i.e., UNITED BANK and NEM INSURANCE go up and down completely randomly.
Pair Corralation between UNITED BANK and NEM INSURANCE
Assuming the 90 days trading horizon UNITED BANK FOR is expected to under-perform the NEM INSURANCE. But the stock apears to be less risky and, when comparing its historical volatility, UNITED BANK FOR is 2.81 times less risky than NEM INSURANCE. The stock trades about -0.08 of its potential returns per unit of risk. The NEM INSURANCE PLC is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 2,000 in NEM INSURANCE PLC on July 17, 2025 and sell it today you would earn a total of 915.00 from holding NEM INSURANCE PLC or generate 45.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED BANK FOR vs. NEM INSURANCE PLC
Performance |
| Timeline |
| UNITED BANK FOR |
| NEM INSURANCE PLC |
UNITED BANK and NEM INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED BANK and NEM INSURANCE
The main advantage of trading using opposite UNITED BANK and NEM INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED BANK position performs unexpectedly, NEM INSURANCE 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 NEM INSURANCE will offset losses from the drop in NEM INSURANCE's long position.| UNITED BANK vs. STACO INSURANCE PLC | UNITED BANK vs. UNION HOMES REAL | UNITED BANK vs. MULTI TREX INTEGRATED FOODS | UNITED BANK vs. NIGERIAN BREWERIES PLC |
| NEM INSURANCE vs. SOVEREIGN TRUST INSURANCE | NEM INSURANCE vs. STERLING FINANCIAL HOLDINGS | NEM INSURANCE vs. GUINEA INSURANCE PLC | NEM INSURANCE vs. VITAFOAM NIGERIA PLC |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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