Correlation Between National Bank and Tarku Resources

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

Diversification Opportunities for National Bank and Tarku Resources

-0.81

Correlation Coefficient

National Bank  Tarku Resources

Pay attention - limited upside

The 3 months correlation between National and Tarku is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Tarku Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tarku Resources 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 Tarku Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tarku Resources has no effect on the direction of National Bank i.e., National Bank and Tarku Resources go up and down completely randomly.

Pair Corralation between National Bank and Tarku Resources

Assuming the 90 days trading horizon National Bank of is expected to generate 0.03 times more return on investment than Tarku Resources. However, National Bank of is 28.77 times less risky than Tarku Resources. It trades about 0.18 of its potential returns per unit of risk. Tarku Resources is currently generating about -0.01 per unit of risk. If you would invest  2,287  in National Bank of on September 17, 2024 and sell it today you would earn a total of  128.00  from holding National Bank of or generate 5.6% return on investment over 90 days.

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

National Bank of  vs.  Tarku Resources

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

Tarku Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tarku Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with National Bank and Tarku Resources

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

The idea behind National Bank of and Tarku Resources 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.