Correlation Between NatWest Group and Supply@Me Capital

Can any of the company-specific risk be diversified away by investing in both NatWest Group and Supply@Me Capital 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 NatWest Group and Supply@Me Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NatWest Group PLC and SupplyMe Capital PLC, you can compare the effects of market volatilities on NatWest Group and Supply@Me Capital 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 NatWest Group with a short position of Supply@Me Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of NatWest Group and Supply@Me Capital.

Diversification Opportunities for NatWest Group and Supply@Me Capital

-0.22

Correlation Coefficient

NatWest Group  Supply@Me Capital

Very good diversification

The 3 months correlation between NatWest and Supply@Me is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding NatWest Group PLC and SupplyMe Capital PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SupplyMe Capital PLC and NatWest Group 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 NatWest Group PLC are associated (or correlated) with Supply@Me Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SupplyMe Capital PLC has no effect on the direction of NatWest Group i.e., NatWest Group and Supply@Me Capital go up and down completely randomly.

Pair Corralation between NatWest Group and Supply@Me Capital

Assuming the 90 days trading horizon NatWest Group is expected to generate 7.07 times less return on investment than Supply@Me Capital. But when comparing it to its historical volatility, NatWest Group PLC is 13.88 times less risky than Supply@Me Capital. It trades about 0.17 of its potential returns per unit of risk. SupplyMe Capital PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  0.30  in SupplyMe Capital PLC on December 2, 2024 and sell it today you would earn a total of  0.02  from holding SupplyMe Capital PLC or generate 6.67% return on investment over 90 days.

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

NatWest Group PLC  vs.  SupplyMe Capital PLC

NatWest Group PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NatWest Group PLC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, NatWest Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

SupplyMe Capital PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SupplyMe Capital PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Supply@Me Capital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NatWest Group and Supply@Me Capital

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

The idea behind NatWest Group PLC and SupplyMe Capital PLC 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.