Correlation Between Settlebank and NBT
Can any of the company-specific risk be diversified away by investing in both Settlebank and NBT 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 Settlebank and NBT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Settlebank and NBT Inc, you can compare the effects of market volatilities on Settlebank and NBT 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 Settlebank with a short position of NBT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Settlebank and NBT.
Diversification Opportunities for Settlebank and NBT
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Settlebank and NBT is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Settlebank and NBT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBT Inc and Settlebank 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 Settlebank are associated (or correlated) with NBT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBT Inc has no effect on the direction of Settlebank i.e., Settlebank and NBT go up and down completely randomly.
Pair Corralation between Settlebank and NBT
Assuming the 90 days trading horizon Settlebank is expected to under-perform the NBT. But the stock apears to be less risky and, when comparing its historical volatility, Settlebank is 1.32 times less risky than NBT. The stock trades about -0.11 of its potential returns per unit of risk. The NBT Inc is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 365,000 in NBT Inc on September 2, 2024 and sell it today you would lose (25,000) from holding NBT Inc or give up 6.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Settlebank vs. NBT Inc
Performance |
| Timeline |
| Settlebank |
| NBT Inc |
Settlebank and NBT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Settlebank and NBT
The main advantage of trading using opposite Settlebank and NBT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Settlebank position performs unexpectedly, NBT 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 NBT will offset losses from the drop in NBT's long position.| Settlebank vs. Busan Industrial Co | Settlebank vs. Busan Ind | Settlebank vs. Mirae Asset Daewoo | Settlebank vs. Finebesteel |
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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 Stocks Directory module to find actively traded stocks across global markets.
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