Correlation Between National Bank and SATO Technologies

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

Diversification Opportunities for National Bank and SATO Technologies

0.26

Correlation Coefficient

National Bank  SATO Technologies

Modest diversification

The 3 months correlation between National and SATO is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and SATO Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SATO Technologies 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 SATO Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SATO Technologies Corp has no effect on the direction of National Bank i.e., National Bank and SATO Technologies go up and down completely randomly.

Pair Corralation between National Bank and SATO Technologies

Assuming the 90 days trading horizon National Bank of is expected to generate 0.05 times more return on investment than SATO Technologies. However, National Bank of is 20.41 times less risky than SATO Technologies. It trades about 0.18 of its potential returns per unit of risk. SATO Technologies Corp is currently generating about -0.07 per unit of risk. If you would invest  2,365  in National Bank of on September 4, 2024 and sell it today you would earn a total of  40.00  from holding National Bank of or generate 1.69% return on investment over 90 days.

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

National Bank of  vs.  SATO Technologies Corp

National Bank

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 14 (%) 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.

SATO Technologies Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SATO Technologies Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, SATO Technologies is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with National Bank and SATO Technologies

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

The idea behind National Bank of and SATO Technologies 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.