Correlation Between National Capital and Equitable Financial

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

Diversification Opportunities for National Capital and Equitable Financial

0.0

Correlation Coefficient

National Capital  Equitable Financial

Pay attention - limited upside

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

Pair Corralation between National Capital and Equitable Financial

If you would invest  5,682  in National Capital Bank on December 30, 2024 and sell it today you would earn a total of  1,318  from holding National Capital Bank or generate 23.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

National Capital Bank  vs.  Equitable Financial Corp

National Capital Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in National Capital Bank are ranked lower than 16 (%) 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.

Equitable Financial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Equitable Financial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Equitable Financial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with National Capital and Equitable Financial

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

The idea behind National Capital Bank and Equitable Financial 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..