Correlation Between National Bank and PG E

Can any of the company-specific risk be diversified away by investing in both National Bank and PG E 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 PG E 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 PG E P6, you can compare the effects of market volatilities on National Bank and PG E 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 PG E. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and PG E.

Diversification Opportunities for National Bank and PG E

0.9

Correlation Coefficient

National Bank  PG E

Almost no diversification

The 3 months correlation between National and PCG6 is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and PG E P6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PG E P6 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 PG E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PG E P6 has no effect on the direction of National Bank i.e., National Bank and PG E go up and down completely randomly.

Pair Corralation between National Bank and PG E

Assuming the 90 days horizon National Bank Holdings is expected to under-perform the PG E. In addition to that, National Bank is 1.3 times more volatile than PG E P6. It trades about -0.19 of its total potential returns per unit of risk. PG E P6 is currently generating about -0.1 per unit of volatility. If you would invest  2,240  in PG E P6 on September 22, 2024 and sell it today you would lose (60.00) from holding PG E P6 or give up 2.68% of portfolio value over 90 days.

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

National Bank Holdings  vs.  PG E P6

National Bank Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, National Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PG E P6

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PG E P6 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, PG E is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with National Bank and PG E

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

The idea behind National Bank Holdings and PG E P6 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.