Correlation Between National Bank and TeraGo

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

Diversification Opportunities for National Bank and TeraGo

-0.41

Correlation Coefficient

National Bank  TeraGo

Very good diversification

The 3 months correlation between National and TeraGo is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and TeraGo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TeraGo Inc 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 TeraGo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TeraGo Inc has no effect on the direction of National Bank i.e., National Bank and TeraGo go up and down completely randomly.

Pair Corralation between National Bank and TeraGo

Assuming the 90 days horizon National Bank of is expected to generate 0.3 times more return on investment than TeraGo. However, National Bank of is 3.32 times less risky than TeraGo. It trades about -0.13 of its potential returns per unit of risk. TeraGo Inc is currently generating about -0.06 per unit of risk. If you would invest  13,089  in National Bank of on December 30, 2024 and sell it today you would lose (1,167) from holding National Bank of or give up 8.92% of portfolio value over 90 days.

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

National Bank of  vs.  TeraGo Inc

National Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating 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.

TeraGo Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days TeraGo Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with National Bank and TeraGo

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

The idea behind National Bank of and TeraGo Inc 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.