Correlation Between National Bank and InPlay Oil

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

Diversification Opportunities for National Bank and InPlay Oil

0.0

Correlation Coefficient

National Bank  InPlay Oil

Pay attention - limited upside

The 3 months correlation between National and InPlay is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and InPlay Oil Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InPlay Oil Corp 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 InPlay Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InPlay Oil Corp has no effect on the direction of National Bank i.e., National Bank and InPlay Oil go up and down completely randomly.

Pair Corralation between National Bank and InPlay Oil

Assuming the 90 days trading horizon National Bank of is expected to generate 0.32 times more return on investment than InPlay Oil. However, National Bank of is 3.08 times less risky than InPlay Oil. It trades about 0.1 of its potential returns per unit of risk. InPlay Oil Corp is currently generating about -0.03 per unit of risk. If you would invest  1,943  in National Bank of on December 1, 2024 and sell it today you would earn a total of  683.00  from holding National Bank of or generate 35.15% return on investment over 90 days.

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

National Bank of  vs.  InPlay Oil Corp

National Bank

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 1 (%) 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.

InPlay Oil Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days InPlay Oil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with National Bank and InPlay Oil

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

The idea behind National Bank of and InPlay Oil Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.