Correlation Between SIG Combibloc and National Bank

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

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

Diversification Opportunities for SIG Combibloc and National Bank

0.05

Correlation Coefficient

SIG Combibloc  National Bank

Significant diversification

The 3 months correlation between SIG and National is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding SIG Combibloc Group and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and SIG Combibloc 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 SIG Combibloc Group 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 SIG Combibloc i.e., SIG Combibloc and National Bank go up and down completely randomly.

Pair Corralation between SIG Combibloc and National Bank

Assuming the 90 days horizon SIG Combibloc Group is expected to generate 0.69 times more return on investment than National Bank. However, SIG Combibloc Group is 1.45 times less risky than National Bank. It trades about 0.12 of its potential returns per unit of risk. National Bank of is currently generating about -0.04 per unit of risk. If you would invest  1,998  in SIG Combibloc Group on October 27, 2024 and sell it today you would earn a total of  38.00  from holding SIG Combibloc Group or generate 1.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

SIG Combibloc Group  vs.  National Bank of

SIG Combibloc Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIG Combibloc Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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.

Pair Trading with SIG Combibloc and National Bank

The main advantage of trading using opposite SIG Combibloc and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIG Combibloc 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 SIG Combibloc Group 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.