Correlation Between National Bank and PJT Partners

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

Diversification Opportunities for National Bank and PJT Partners

0.67

Correlation Coefficient

National Bank  PJT Partners

Poor diversification

The 3 months correlation between National and PJT is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and PJT Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PJT Partners 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 PJT Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PJT Partners has no effect on the direction of National Bank i.e., National Bank and PJT Partners go up and down completely randomly.

Pair Corralation between National Bank and PJT Partners

Given the investment horizon of 90 days National Bank Holdings is expected to under-perform the PJT Partners. But the stock apears to be less risky and, when comparing its historical volatility, National Bank Holdings is 1.29 times less risky than PJT Partners. The stock trades about -0.27 of its potential returns per unit of risk. The PJT Partners is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  15,845  in PJT Partners on October 11, 2024 and sell it today you would lose (8.00) from holding PJT Partners or give up 0.05% of portfolio value over 90 days.

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

National Bank Holdings  vs.  PJT Partners

National Bank Holdings

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical indicators, National Bank is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

PJT Partners

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PJT Partners are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting forward-looking indicators, PJT Partners may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with National Bank and PJT Partners

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

The idea behind National Bank Holdings and PJT Partners 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.