Correlation Between National Bank and Dream Office

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

Diversification Opportunities for National Bank and Dream Office

-0.91
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between National and Dream is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Dream Office Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dream Office Real and National Bank 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 National Bank of are associated (or correlated) with Dream Office. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dream Office Real has no effect on the direction of National Bank i.e., National Bank and Dream Office go up and down completely randomly.

Pair Corralation between National Bank and Dream Office

Assuming the 90 days trading horizon National Bank of is expected to generate 0.19 times more return on investment than Dream Office. However, National Bank of is 5.34 times less risky than Dream Office. It trades about 0.15 of its potential returns per unit of risk. Dream Office Real is currently generating about 0.02 per unit of risk. If you would invest  2,082  in National Bank of on October 5, 2024 and sell it today you would earn a total of  548.00  from holding National Bank of or generate 26.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy99.68%
ValuesDaily Returns

National Bank of  vs.  Dream Office Real

 Performance 
       Timeline  
National Bank 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
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.
Dream Office Real 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Dream Office Real has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

National Bank and Dream Office Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with National Bank and Dream Office

The main advantage of trading using opposite National Bank and Dream Office positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Dream Office 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 Dream Office will offset losses from the drop in Dream Office's long position.
The idea behind National Bank of and Dream Office Real 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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