Correlation Between National Bank and GDI Integrated

Can any of the company-specific risk be diversified away by investing in both National Bank and GDI Integrated 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 GDI Integrated 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 GDI Integrated, you can compare the effects of market volatilities on National Bank and GDI Integrated 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 GDI Integrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and GDI Integrated.

Diversification Opportunities for National Bank and GDI Integrated

0.13

Correlation Coefficient

National Bank  GDI Integrated

Average diversification

The 3 months correlation between National and GDI is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and GDI Integrated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GDI Integrated 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 GDI Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GDI Integrated has no effect on the direction of National Bank i.e., National Bank and GDI Integrated go up and down completely randomly.

Pair Corralation between National Bank and GDI Integrated

Assuming the 90 days trading horizon National Bank is expected to generate 2.37 times less return on investment than GDI Integrated. But when comparing it to its historical volatility, National Bank of is 4.55 times less risky than GDI Integrated. It trades about 0.12 of its potential returns per unit of risk. GDI Integrated is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,160  in GDI Integrated on October 13, 2024 and sell it today you would earn a total of  470.00  from holding GDI Integrated or generate 14.87% return on investment over 90 days.

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

National Bank of  vs.  GDI Integrated

National Bank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 5 (%) 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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

GDI Integrated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GDI Integrated has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with National Bank and GDI Integrated

The main advantage of trading using opposite National Bank and GDI Integrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, GDI Integrated 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 GDI Integrated will offset losses from the drop in GDI Integrated's long position.

The idea behind National Bank of and GDI Integrated 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..