Correlation Between Lewis Clark and National Capital

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Can any of the company-specific risk be diversified away by investing in both Lewis Clark and National Capital 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 Lewis Clark and National Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lewis Clark Bancorp and National Capital Bank, you can compare the effects of market volatilities on Lewis Clark and National Capital 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 Lewis Clark with a short position of National Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lewis Clark and National Capital.

Diversification Opportunities for Lewis Clark and National Capital

-0.33
  Correlation Coefficient

Very good diversification

The 3 months correlation between Lewis and National is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Lewis Clark Bancorp and National Capital Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Capital Bank and Lewis Clark 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 Lewis Clark Bancorp are associated (or correlated) with National Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Capital Bank has no effect on the direction of Lewis Clark i.e., Lewis Clark and National Capital go up and down completely randomly.

Pair Corralation between Lewis Clark and National Capital

Given the investment horizon of 90 days Lewis Clark Bancorp is expected to generate 0.26 times more return on investment than National Capital. However, Lewis Clark Bancorp is 3.81 times less risky than National Capital. It trades about 0.0 of its potential returns per unit of risk. National Capital Bank is currently generating about -0.04 per unit of risk. If you would invest  3,005  in Lewis Clark Bancorp on October 27, 2024 and sell it today you would lose (5.00) from holding Lewis Clark Bancorp or give up 0.17% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Lewis Clark Bancorp  vs.  National Capital Bank

 Performance 
       Timeline  
Lewis Clark Bancorp 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Lewis Clark Bancorp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Lewis Clark may actually be approaching a critical reversion point that can send shares even higher in February 2025.
National Capital Bank 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in National Capital Bank are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, National Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

Lewis Clark and National Capital Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lewis Clark and National Capital

The main advantage of trading using opposite Lewis Clark and National Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lewis Clark position performs unexpectedly, National Capital 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 Capital will offset losses from the drop in National Capital's long position.
The idea behind Lewis Clark Bancorp and National Capital Bank 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.
Check out your portfolio center.
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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