Correlation Between National Bank and Bank Utica

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

Diversification Opportunities for National Bank and Bank Utica

0.16

Correlation Coefficient

National Bank  Bank Utica

Average diversification

The 3 months correlation between National and Bank is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and Bank Utica Ny in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Utica Ny 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 Utica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Utica Ny has no effect on the direction of National Bank i.e., National Bank and Bank Utica go up and down completely randomly.

Pair Corralation between National Bank and Bank Utica

Given the investment horizon of 90 days National Bank Holdings is expected to under-perform the Bank Utica. But the stock apears to be less risky and, when comparing its historical volatility, National Bank Holdings is 1.12 times less risky than Bank Utica. The stock trades about -0.11 of its potential returns per unit of risk. The Bank Utica Ny is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  49,050  in Bank Utica Ny on December 29, 2024 and sell it today you would lose (2,550) from holding Bank Utica Ny or give up 5.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

National Bank Holdings  vs.  Bank Utica Ny

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. In spite of latest unfluctuating performance, the Stock's technical indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Bank Utica Ny

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Utica Ny has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Bank Utica is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with National Bank and Bank Utica

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

The idea behind National Bank Holdings and Bank Utica Ny 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.