Correlation Between Signature Bank and National Bank

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

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

Diversification Opportunities for Signature Bank and National Bank

0.0

Correlation Coefficient

Signature Bank  National Bank

Pay attention - limited upside

The 3 months correlation between Signature and National is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Signature Bank and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and Signature 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 Signature Bank 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 Signature Bank i.e., Signature Bank and National Bank go up and down completely randomly.

Pair Corralation between Signature Bank and National Bank

If you would invest  792.00  in National Bank of on December 30, 2024 and sell it today you would earn a total of  273.00  from holding National Bank of or generate 34.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Signature Bank  vs.  National Bank of

Signature Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Signature Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Signature Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

National Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward indicators, National Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Signature Bank and National Bank

The main advantage of trading using opposite Signature Bank and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Signature Bank 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 Signature Bank and National Bank of 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.