Correlation Between Big Rock and National Bank

Can any of the company-specific risk be diversified away by investing in both Big Rock and National Bank 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 Big Rock and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Big Rock Brewery and National Bank of, you can compare the effects of market volatilities on Big Rock and National Bank 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 Big Rock with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Rock and National Bank.

Diversification Opportunities for Big Rock and National Bank

0.15

Correlation Coefficient

Big Rock  National Bank

Average diversification

The 3 months correlation between Big and National is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Big Rock Brewery and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and Big Rock 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 Big Rock Brewery are associated (or correlated) with National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of Big Rock i.e., Big Rock and National Bank go up and down completely randomly.

Pair Corralation between Big Rock and National Bank

Assuming the 90 days horizon Big Rock Brewery is expected to generate 14.45 times more return on investment than National Bank. However, Big Rock is 14.45 times more volatile than National Bank of. It trades about 0.02 of its potential returns per unit of risk. National Bank of is currently generating about -0.01 per unit of risk. If you would invest  112.00  in Big Rock Brewery on December 21, 2024 and sell it today you would lose (2.00) from holding Big Rock Brewery or give up 1.79% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Big Rock Brewery  vs.  National Bank of

Big Rock Brewery

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Big Rock Brewery are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Big Rock may actually be approaching a critical reversion point that can send shares even higher in April 2025.

National Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, National Bank is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Big Rock and National Bank

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

The idea behind Big Rock Brewery and National Bank of 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 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..