Correlation Between Sofina Socit and Banque Nationale

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

By analyzing existing cross correlation between Sofina Socit Anonyme and Banque nationale de, you can compare the effects of market volatilities on Sofina Socit and Banque Nationale 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 Sofina Socit with a short position of Banque Nationale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sofina Socit and Banque Nationale.

Diversification Opportunities for Sofina Socit and Banque Nationale

0.55

Correlation Coefficient

Sofina Socit  Banque Nationale

Very weak diversification

The 3 months correlation between Sofina and Banque is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Sofina Socit Anonyme and Banque nationale de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banque nationale and Sofina Socit 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 Sofina Socit Anonyme are associated (or correlated) with Banque Nationale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banque nationale has no effect on the direction of Sofina Socit i.e., Sofina Socit and Banque Nationale go up and down completely randomly.

Pair Corralation between Sofina Socit and Banque Nationale

Assuming the 90 days trading horizon Sofina Socit Anonyme is expected to generate 1.68 times more return on investment than Banque Nationale. However, Sofina Socit is 1.68 times more volatile than Banque nationale de. It trades about 0.01 of its potential returns per unit of risk. Banque nationale de is currently generating about -0.15 per unit of risk. If you would invest  21,840  in Sofina Socit Anonyme on August 31, 2024 and sell it today you would lose (60.00) from holding Sofina Socit Anonyme or give up 0.27% of portfolio value over 90 days.

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

Sofina Socit Anonyme  vs.  Banque nationale de

Sofina Socit Anonyme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sofina Socit Anonyme has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Sofina Socit is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Banque nationale

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Banque nationale de has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's fundamental drivers remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Sofina Socit and Banque Nationale

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

The idea behind Sofina Socit Anonyme and Banque nationale de 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.