Correlation Between Agricultural Bank and Natwest Group
Can any of the company-specific risk be diversified away by investing in both Agricultural Bank and Natwest Group 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 Agricultural Bank and Natwest Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Agricultural Bank and Natwest Group PLC, you can compare the effects of market volatilities on Agricultural Bank and Natwest Group 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 Agricultural Bank with a short position of Natwest Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agricultural Bank and Natwest Group.
Diversification Opportunities for Agricultural Bank and Natwest Group
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Agricultural and Natwest is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Agricultural Bank and Natwest Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natwest Group PLC and Agricultural 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 Agricultural Bank are associated (or correlated) with Natwest Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natwest Group PLC has no effect on the direction of Agricultural Bank i.e., Agricultural Bank and Natwest Group go up and down completely randomly.
Pair Corralation between Agricultural Bank and Natwest Group
Assuming the 90 days horizon Agricultural Bank is expected to generate 1.45 times less return on investment than Natwest Group. In addition to that, Agricultural Bank is 1.92 times more volatile than Natwest Group PLC. It trades about 0.06 of its total potential returns per unit of risk. Natwest Group PLC is currently generating about 0.16 per unit of volatility. If you would invest 894.00 in Natwest Group PLC on September 13, 2024 and sell it today you would earn a total of 150.00 from holding Natwest Group PLC or generate 16.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.44% |
Values | Daily Returns |
Agricultural Bank vs. Natwest Group PLC
Performance |
Timeline |
Agricultural Bank |
Natwest Group PLC |
Agricultural Bank and Natwest Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Agricultural Bank and Natwest Group
The main advantage of trading using opposite Agricultural Bank and Natwest Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Agricultural Bank position performs unexpectedly, Natwest Group 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 Natwest Group will offset losses from the drop in Natwest Group's long position.Agricultural Bank vs. China Construction Bank | Agricultural Bank vs. National Australia Bank | Agricultural Bank vs. Svenska Handelsbanken AB | Agricultural Bank vs. Bank of America |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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