Correlation Between Grupo Financiero and National Bank

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

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

Diversification Opportunities for Grupo Financiero and National Bank

-0.03

Correlation Coefficient

Grupo Financiero  National Bank

Good diversification

The 3 months correlation between Grupo and National is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Financiero Inbursa and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and Grupo Financiero 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 Grupo Financiero Inbursa 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 Grupo Financiero i.e., Grupo Financiero and National Bank go up and down completely randomly.

Pair Corralation between Grupo Financiero and National Bank

Assuming the 90 days horizon Grupo Financiero is expected to generate 407.92 times less return on investment than National Bank. In addition to that, Grupo Financiero is 1.48 times more volatile than National Bank of. It trades about 0.0 of its total potential returns per unit of risk. National Bank of is currently generating about 0.25 per unit of volatility. If you would invest  792.00  in National Bank of on December 29, 2024 and sell it today you would earn a total of  258.00  from holding National Bank of or generate 32.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Grupo Financiero Inbursa  vs.  National Bank of

Grupo Financiero Inbursa

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grupo Financiero Inbursa has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Grupo Financiero is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

National Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, National Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Grupo Financiero and National Bank

The main advantage of trading using opposite Grupo Financiero and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Financiero 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 Grupo Financiero Inbursa 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.