Correlation Between National Bank and Bank Of

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

Diversification Opportunities for National Bank and Bank Of

0.91

Correlation Coefficient

National Bank  Bank Of

Almost no diversification

The 3 months correlation between National and Bank is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and The Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The 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 Bank Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Bank has no effect on the direction of National Bank i.e., National Bank and Bank Of go up and down completely randomly.

Pair Corralation between National Bank and Bank Of

Assuming the 90 days horizon National Bank Holdings is expected to under-perform the Bank Of. But the stock apears to be less risky and, when comparing its historical volatility, National Bank Holdings is 1.02 times less risky than Bank Of. The stock trades about -0.07 of its potential returns per unit of risk. The The Bank of is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  7,346  in The Bank of on September 21, 2024 and sell it today you would earn a total of  44.00  from holding The Bank of or generate 0.6% return on investment over 90 days.

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

National Bank Holdings  vs.  The Bank of

National Bank Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank Holdings are ranked lower than 7 (%) 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.

The Bank

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Bank of are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bank Of reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Bank and Bank Of

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

The idea behind National Bank Holdings and The Bank of 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.