Correlation Between National Bank and Grupo Financiero

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

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

Diversification Opportunities for National Bank and Grupo Financiero

-0.01

Correlation Coefficient

National Bank  Grupo Financiero

Good diversification

The 3 months correlation between National and Grupo is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Grupo Financiero Inbursa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Financiero Inbursa 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 of are associated (or correlated) with Grupo Financiero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Financiero Inbursa has no effect on the direction of National Bank i.e., National Bank and Grupo Financiero go up and down completely randomly.

Pair Corralation between National Bank and Grupo Financiero

Assuming the 90 days horizon National Bank is expected to generate 2.15 times less return on investment than Grupo Financiero. But when comparing it to its historical volatility, National Bank of is 1.51 times less risky than Grupo Financiero. It trades about 0.23 of its potential returns per unit of risk. Grupo Financiero Inbursa is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  210.00  in Grupo Financiero Inbursa on December 1, 2024 and sell it today you would earn a total of  36.00  from holding Grupo Financiero Inbursa or generate 17.14% return on investment over 90 days.

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

National Bank of  vs.  Grupo Financiero Inbursa

National Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, National Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Grupo Financiero Inbursa

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grupo Financiero Inbursa are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Grupo Financiero reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Bank and Grupo Financiero

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

The idea behind National Bank of and Grupo Financiero Inbursa 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.