Correlation Between National Bank and Zephyr Minerals

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

Diversification Opportunities for National Bank and Zephyr Minerals

-0.47

Correlation Coefficient

National Bank  Zephyr Minerals

Very good diversification

The 3 months correlation between National and Zephyr is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Zephyr Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zephyr Minerals 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 Zephyr Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zephyr Minerals has no effect on the direction of National Bank i.e., National Bank and Zephyr Minerals go up and down completely randomly.

Pair Corralation between National Bank and Zephyr Minerals

Assuming the 90 days trading horizon National Bank is expected to generate 15.87 times less return on investment than Zephyr Minerals. But when comparing it to its historical volatility, National Bank of is 46.44 times less risky than Zephyr Minerals. It trades about 0.17 of its potential returns per unit of risk. Zephyr Minerals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Zephyr Minerals on October 6, 2024 and sell it today you would earn a total of  0.00  from holding Zephyr Minerals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

National Bank of  vs.  Zephyr Minerals

National Bank

Risk-Adjusted Performance

13 of 100

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Zephyr Minerals

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Zephyr Minerals are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Zephyr Minerals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Bank and Zephyr Minerals

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

The idea behind National Bank of and Zephyr Minerals 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.