Correlation Between Vastned Retail and National Bank

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

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

Diversification Opportunities for Vastned Retail and National Bank

0.05

Correlation Coefficient

Vastned Retail  National Bank

Significant diversification

The 3 months correlation between Vastned and National is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Vastned Retail NV and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings and Vastned Retail 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 Vastned Retail NV 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 Holdings has no effect on the direction of Vastned Retail i.e., Vastned Retail and National Bank go up and down completely randomly.

Pair Corralation between Vastned Retail and National Bank

Assuming the 90 days horizon Vastned Retail NV is expected to under-perform the National Bank. But the stock apears to be less risky and, when comparing its historical volatility, Vastned Retail NV is 2.4 times less risky than National Bank. The stock trades about -0.02 of its potential returns per unit of risk. The National Bank Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,511  in National Bank Holdings on September 29, 2024 and sell it today you would earn a total of  569.00  from holding National Bank Holdings or generate 16.21% return on investment over 90 days.

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

Vastned Retail NV  vs.  National Bank Holdings

Vastned Retail NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vastned Retail NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vastned Retail is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

National Bank Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, National Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vastned Retail and National Bank

The main advantage of trading using opposite Vastned Retail and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vastned Retail 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 Vastned Retail NV and National Bank Holdings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.