Correlation Between GDI Integrated and National Bank

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

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

Diversification Opportunities for GDI Integrated and National Bank

0.29

Correlation Coefficient

GDI Integrated  National Bank

Modest diversification

The 3 months correlation between GDI and National is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding GDI Integrated and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and GDI Integrated 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 GDI Integrated 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 GDI Integrated i.e., GDI Integrated and National Bank go up and down completely randomly.

Pair Corralation between GDI Integrated and National Bank

Assuming the 90 days trading horizon GDI Integrated is expected to under-perform the National Bank. In addition to that, GDI Integrated is 2.35 times more volatile than National Bank of. It trades about -0.01 of its total potential returns per unit of risk. National Bank of is currently generating about 0.09 per unit of volatility. If you would invest  1,911  in National Bank of on September 24, 2024 and sell it today you would earn a total of  704.00  from holding National Bank of or generate 36.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

GDI Integrated  vs.  National Bank of

GDI Integrated

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GDI Integrated are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, GDI Integrated is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

National Bank

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, National Bank is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GDI Integrated and National Bank

The main advantage of trading using opposite GDI Integrated and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GDI Integrated 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 GDI Integrated 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.