Correlation Between National Bank and EAST SIDE

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

Diversification Opportunities for National Bank and EAST SIDE

-0.54

Correlation Coefficient

National Bank  EAST SIDE

Excellent diversification

The 3 months correlation between National and EAST is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and EAST SIDE GAMES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAST SIDE GAMES 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 EAST SIDE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAST SIDE GAMES has no effect on the direction of National Bank i.e., National Bank and EAST SIDE go up and down completely randomly.

Pair Corralation between National Bank and EAST SIDE

Assuming the 90 days horizon National Bank Holdings is expected to generate 0.55 times more return on investment than EAST SIDE. However, National Bank Holdings is 1.83 times less risky than EAST SIDE. It trades about 0.09 of its potential returns per unit of risk. EAST SIDE GAMES is currently generating about -0.08 per unit of risk. If you would invest  3,597  in National Bank Holdings on September 28, 2024 and sell it today you would earn a total of  463.00  from holding National Bank Holdings or generate 12.87% 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.  EAST SIDE GAMES

National Bank Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, National Bank reported solid returns over the last few months and may actually be approaching a breakup point.

EAST SIDE GAMES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EAST SIDE GAMES 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with National Bank and EAST SIDE

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

The idea behind National Bank Holdings and EAST SIDE GAMES 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.