Factor Analysis on the variability of the Nigerian Stock Market

This study focused on using factor analysis in determining the variability of the Nigerian Stock Exchange Market. The study used secondary data sourced from daily official list of the Nigeria Stock Exchange (NSE). The data comprises of monthly stock rates of returns of the Nigerian Stock Exchange daily official list for the period of January, 2015 - December 2017. The objective of the study was to identify the companies that contribute to the variability of the Nigeria Stock Exchange within the period 2015-2017. The findings of the study showed that that five factors can be retained since their Eigen values were larger than 1 and they were able to explain about 89.71% of total variability in the model. It was further found that listed companies that explain over 50% of the variability attributed to the model were in the following order dangsugar, dnmeyer, fcmb, oando, cadbury, fidelitybk, transcorp, guaranty, diamondbnk, flourmill, livestock, abbeybds, conoil, glaxosmith, academy, zenithbank, jberger, uba, dangflour, skyebank, access, Sevenup, guinness, aiico, maybaker, unilever, sterlnbank, mrs, total, unitybnk, dangcem, abctrans, mobil, studpress, pz, and wemabank. This result implies that wemabank was the least performer with about 63.18% while dansugar performed better within the observed period. Based on the findings of the study, potential investors are advised to invest in companies such as dansugar since it was found to be the best in determining the variability in the Nigerian Stock Exchange Market within the scope of the present study.