Correlation Between NAT BANK and BANK QLD
Can any of the company-specific risk be diversified away by investing in both NAT BANK and BANK QLD 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 NAT BANK and BANK QLD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NAT BANK CPS and BANK QLD PREF, you can compare the effects of market volatilities on NAT BANK and BANK QLD 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 NAT BANK with a short position of BANK QLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAT BANK and BANK QLD.
Diversification Opportunities for NAT BANK and BANK QLD
Pay attention - limited upside
The 3 months correlation between NAT and BANK is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NAT BANK CPS and BANK QLD PREF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK QLD PREF and NAT 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 NAT BANK CPS are associated (or correlated) with BANK QLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK QLD PREF has no effect on the direction of NAT BANK i.e., NAT BANK and BANK QLD go up and down completely randomly.
Pair Corralation between NAT BANK and BANK QLD
If you would invest (100.00) in BANK QLD PREF on October 10, 2024 and sell it today you would earn a total of 100.00 from holding BANK QLD PREF or generate -100.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
NAT BANK CPS vs. BANK QLD PREF
Performance |
Timeline |
NAT BANK CPS |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
BANK QLD PREF |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
NAT BANK and BANK QLD Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NAT BANK and BANK QLD
The main advantage of trading using opposite NAT BANK and BANK QLD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAT BANK position performs unexpectedly, BANK QLD 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 BANK QLD will offset losses from the drop in BANK QLD's long position.The idea behind NAT BANK CPS and BANK QLD PREF 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Equity Valuation Check real value of public entities based on technical and fundamental data |