Correlation Between Commercial National and QNB Corp

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

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

Diversification Opportunities for Commercial National and QNB Corp

0.23

Correlation Coefficient

Commercial National  QNB Corp

Modest diversification

The 3 months correlation between Commercial and QNB is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Commercial National Financial and QNB Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QNB Corp and Commercial National 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 Commercial National Financial are associated (or correlated) with QNB Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QNB Corp has no effect on the direction of Commercial National i.e., Commercial National and QNB Corp go up and down completely randomly.

Pair Corralation between Commercial National and QNB Corp

Given the investment horizon of 90 days Commercial National is expected to generate 1.39 times less return on investment than QNB Corp. In addition to that, Commercial National is 2.42 times more volatile than QNB Corp. It trades about 0.03 of its total potential returns per unit of risk. QNB Corp is currently generating about 0.09 per unit of volatility. If you would invest  3,357  in QNB Corp on December 28, 2024 and sell it today you would earn a total of  134.00  from holding QNB Corp or generate 3.99% return on investment over 90 days.

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

Commercial National Financial  vs.  QNB Corp

Commercial National

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Commercial National Financial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Commercial National is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

QNB Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in QNB Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, QNB Corp is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Commercial National and QNB Corp

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

The idea behind Commercial National Financial and QNB Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.