Correlation Between Reacap Financial and National Bank

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

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

Diversification Opportunities for Reacap Financial and National Bank

0.0

Correlation Coefficient

Reacap Financial  National Bank

Pay attention - limited upside

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

Pair Corralation between Reacap Financial and National Bank

If you would invest  675.00  in Reacap Financial Investments on September 17, 2024 and sell it today you would earn a total of  16.00  from holding Reacap Financial Investments or generate 2.37% return on investment over 90 days.

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

Reacap Financial Investments  vs.  National Bank

Reacap Financial Inv

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Reacap Financial Investments are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Reacap Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

National Bank

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Reacap Financial and National Bank

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

The idea behind Reacap Financial Investments and National Bank 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.