Correlation Between DICKER DATA and National Bank

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

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

Diversification Opportunities for DICKER DATA and National Bank

-0.62

Correlation Coefficient

DICKER DATA  National Bank

Excellent diversification

The 3 months correlation between DICKER and National is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding DICKER DATA LTD and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings and DICKER DATA 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 DICKER DATA LTD 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 Holdings has no effect on the direction of DICKER DATA i.e., DICKER DATA and National Bank go up and down completely randomly.

Pair Corralation between DICKER DATA and National Bank

Assuming the 90 days horizon DICKER DATA LTD is expected to under-perform the National Bank. In addition to that, DICKER DATA is 1.16 times more volatile than National Bank Holdings. It trades about -0.04 of its total potential returns per unit of risk. National Bank Holdings is currently generating about 0.05 per unit of volatility. If you would invest  3,198  in National Bank Holdings on September 25, 2024 and sell it today you would earn a total of  822.00  from holding National Bank Holdings or generate 25.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

DICKER DATA LTD  vs.  National Bank Holdings

DICKER DATA LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DICKER DATA LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

National Bank Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, National Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DICKER DATA and National Bank

The main advantage of trading using opposite DICKER DATA and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DICKER DATA 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 DICKER DATA LTD and National Bank Holdings 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.