Correlation Between National Bank and ODIN Investments

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

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

Diversification Opportunities for National Bank and ODIN Investments

0.0

Correlation Coefficient

National Bank  ODIN Investments

Pay attention - limited upside

The 3 months correlation between National and ODIN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding National Bank and ODIN Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ODIN Investments 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 are associated (or correlated) with ODIN Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ODIN Investments has no effect on the direction of National Bank i.e., National Bank and ODIN Investments go up and down completely randomly.

Pair Corralation between National Bank and ODIN Investments

If you would invest  175.00  in ODIN Investments on December 24, 2024 and sell it today you would earn a total of  5.00  from holding ODIN Investments or generate 2.86% return on investment over 90 days.

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

National Bank  vs.  ODIN Investments

National Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, National Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ODIN Investments

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ODIN Investments are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, ODIN Investments 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 ODIN Investments

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

The idea behind National Bank and ODIN Investments 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.