Correlation Between National Capital and Chesapeake Finl

Can any of the company-specific risk be diversified away by investing in both National Capital and Chesapeake Finl 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 Capital and Chesapeake Finl into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between National Capital Bank and Chesapeake Finl Shs, you can compare the effects of market volatilities on National Capital and Chesapeake Finl 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 Capital with a short position of Chesapeake Finl. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Capital and Chesapeake Finl.

Diversification Opportunities for National Capital and Chesapeake Finl

0.0

Correlation Coefficient

National Capital  Chesapeake Finl

Pay attention - limited upside

The 3 months correlation between National and Chesapeake is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding National Capital Bank and Chesapeake Finl Shs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Finl Shs and National Capital 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 Capital Bank are associated (or correlated) with Chesapeake Finl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Finl Shs has no effect on the direction of National Capital i.e., National Capital and Chesapeake Finl go up and down completely randomly.

Pair Corralation between National Capital and Chesapeake Finl

Given the investment horizon of 90 days National Capital Bank is expected to generate 97.76 times more return on investment than Chesapeake Finl. However, National Capital is 97.76 times more volatile than Chesapeake Finl Shs. It trades about 0.32 of its potential returns per unit of risk. Chesapeake Finl Shs is currently generating about 0.04 per unit of risk. If you would invest  4,446  in National Capital Bank on September 16, 2024 and sell it today you would earn a total of  3,151  from holding National Capital Bank or generate 70.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

National Capital Bank  vs.  Chesapeake Finl Shs

National Capital Bank

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in National Capital Bank are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, National Capital sustained solid returns over the last few months and may actually be approaching a breakup point.

Chesapeake Finl Shs

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chesapeake Finl Shs are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking signals, Chesapeake Finl is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with National Capital and Chesapeake Finl

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

The idea behind National Capital Bank and Chesapeake Finl Shs 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.