Correlation Between National Bank and Acciona SA

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

Diversification Opportunities for National Bank and Acciona SA

0.44

Correlation Coefficient

National Bank  Acciona SA

Very weak diversification

The 3 months correlation between National and Acciona is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Acciona SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acciona SA 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 Acciona SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acciona SA has no effect on the direction of National Bank i.e., National Bank and Acciona SA go up and down completely randomly.

Pair Corralation between National Bank and Acciona SA

Assuming the 90 days horizon National Bank of is expected to generate 0.24 times more return on investment than Acciona SA. However, National Bank of is 4.23 times less risky than Acciona SA. It trades about -0.25 of its potential returns per unit of risk. Acciona SA is currently generating about -0.14 per unit of risk. If you would invest  9,483  in National Bank of on October 12, 2024 and sell it today you would lose (287.00) from holding National Bank of or give up 3.03% of portfolio value over 90 days.

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

National Bank of  vs.  Acciona SA

National Bank

Risk-Adjusted Performance

0 of 100

Very Weak

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

Acciona SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acciona SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with National Bank and Acciona SA

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

The idea behind National Bank of and Acciona SA 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.