Correlation Between Tarku Resources and National Bank

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

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

Diversification Opportunities for Tarku Resources and National Bank

-0.26

Correlation Coefficient

Tarku Resources  National Bank

Very good diversification

The 3 months correlation between Tarku and National is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Tarku Resources and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and Tarku Resources 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 Tarku Resources 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 Tarku Resources i.e., Tarku Resources and National Bank go up and down completely randomly.

Pair Corralation between Tarku Resources and National Bank

Assuming the 90 days horizon Tarku Resources is expected to generate 23.97 times more return on investment than National Bank. However, Tarku Resources is 23.97 times more volatile than National Bank of. It trades about 0.19 of its potential returns per unit of risk. National Bank of is currently generating about 0.23 per unit of risk. If you would invest  1.00  in Tarku Resources on October 5, 2024 and sell it today you would earn a total of  0.50  from holding Tarku Resources or generate 50.0% return on investment over 90 days.

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

Tarku Resources  vs.  National Bank of

Tarku Resources

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tarku Resources are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Tarku Resources showed solid returns over the last few months and may actually be approaching a breakup point.

National Bank

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, National Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Tarku Resources and National Bank

The main advantage of trading using opposite Tarku Resources and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tarku Resources 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 Tarku Resources 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.