Correlation Between IA FINANCIAL and National Bank
Can any of the company-specific risk be diversified away by investing in both IA FINANCIAL 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 IA FINANCIAL and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IA FINANCIAL P and National Bank Holdings, you can compare the effects of market volatilities on IA FINANCIAL 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 IA FINANCIAL with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of IA FINANCIAL and National Bank.
Diversification Opportunities for IA FINANCIAL and National Bank
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 1OD and National is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding IA FINANCIAL P 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 IA FINANCIAL 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 IA FINANCIAL P 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 IA FINANCIAL i.e., IA FINANCIAL and National Bank go up and down completely randomly.
Pair Corralation between IA FINANCIAL and National Bank
Assuming the 90 days horizon IA FINANCIAL P is expected to generate 0.8 times more return on investment than National Bank. However, IA FINANCIAL P is 1.25 times less risky than National Bank. It trades about 0.19 of its potential returns per unit of risk. National Bank Holdings is currently generating about 0.12 per unit of risk. If you would invest 5,818 in IA FINANCIAL P on September 3, 2024 and sell it today you would earn a total of 3,082 from holding IA FINANCIAL P or generate 52.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
IA FINANCIAL P vs. National Bank Holdings
Performance |
| Timeline |
| IA FINANCIAL P |
| National Bank Holdings |
IA FINANCIAL and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IA FINANCIAL and National Bank
The main advantage of trading using opposite IA FINANCIAL and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IA FINANCIAL 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.| IA FINANCIAL vs. Allianz SE | IA FINANCIAL vs. Superior Plus Corp | IA FINANCIAL vs. NMI Holdings | IA FINANCIAL vs. Origin Agritech |
| National Bank vs. NXP Semiconductors NV | National Bank vs. ON SEMICONDUCTOR | National Bank vs. Tower One Wireless | National Bank vs. SK TELECOM TDADR |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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