Correlation Between National Bank and ALIOR BANK

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

By analyzing existing cross correlation between National Bank Holdings and ALIOR BANK, you can compare the effects of market volatilities on National Bank and ALIOR BANK 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 ALIOR BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and ALIOR BANK.

Diversification Opportunities for National Bank and ALIOR BANK

-0.48

Correlation Coefficient

National Bank  ALIOR BANK

Very good diversification

The 3 months correlation between National and ALIOR is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and ALIOR BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALIOR BANK 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 Holdings are associated (or correlated) with ALIOR BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALIOR BANK has no effect on the direction of National Bank i.e., National Bank and ALIOR BANK go up and down completely randomly.

Pair Corralation between National Bank and ALIOR BANK

Assuming the 90 days horizon National Bank Holdings is expected to under-perform the ALIOR BANK. But the stock apears to be less risky and, when comparing its historical volatility, National Bank Holdings is 1.17 times less risky than ALIOR BANK. The stock trades about -0.17 of its potential returns per unit of risk. The ALIOR BANK is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,058  in ALIOR BANK on December 11, 2024 and sell it today you would earn a total of  300.00  from holding ALIOR BANK or generate 14.58% return on investment over 90 days.

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

National Bank Holdings  vs.  ALIOR BANK

National Bank Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Bank Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ALIOR BANK

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ALIOR BANK are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, ALIOR BANK exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Bank and ALIOR BANK

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

The idea behind National Bank Holdings and ALIOR BANK 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.