Correlation Between Tubize Fin and Banque Nationale

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

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

Diversification Opportunities for Tubize Fin and Banque Nationale

-0.61

Correlation Coefficient

Tubize Fin  Banque Nationale

Excellent diversification

The 3 months correlation between Tubize and Banque is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Tubize Fin and Banque nationale de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banque nationale and Tubize Fin 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 Tubize Fin 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 Tubize Fin i.e., Tubize Fin and Banque Nationale go up and down completely randomly.

Pair Corralation between Tubize Fin and Banque Nationale

Assuming the 90 days trading horizon Tubize Fin is expected to under-perform the Banque Nationale. But the stock apears to be less risky and, when comparing its historical volatility, Tubize Fin is 1.42 times less risky than Banque Nationale. The stock trades about -0.04 of its potential returns per unit of risk. The Banque nationale de is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  38,400  in Banque nationale de on December 30, 2024 and sell it today you would lose (2,600) from holding Banque nationale de or give up 6.77% of portfolio value over 90 days.

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

Tubize Fin  vs.  Banque nationale de

Tubize Fin

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tubize Fin has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Tubize Fin 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

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 relatively invariable fundamental drivers, Banque Nationale is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Tubize Fin and Banque Nationale

The main advantage of trading using opposite Tubize Fin and Banque Nationale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tubize Fin 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 Tubize Fin 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.