Correlation Between INTER CARS and National Bank
Can any of the company-specific risk be diversified away by investing in both INTER CARS 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 INTER CARS and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTER CARS SA and National Bank Holdings, you can compare the effects of market volatilities on INTER CARS 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 INTER CARS with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTER CARS and National Bank.
Diversification Opportunities for INTER CARS and National Bank
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between INTER and National is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA 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 INTER CARS 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 INTER CARS SA 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 INTER CARS i.e., INTER CARS and National Bank go up and down completely randomly.
Pair Corralation between INTER CARS and National Bank
Assuming the 90 days horizon INTER CARS SA is expected to generate 0.55 times more return on investment than National Bank. However, INTER CARS SA is 1.8 times less risky than National Bank. It trades about 0.25 of its potential returns per unit of risk. National Bank Holdings is currently generating about 0.14 per unit of risk. If you would invest 10,460 in INTER CARS SA on September 1, 2024 and sell it today you would earn a total of 1,060 from holding INTER CARS SA or generate 10.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTER CARS SA vs. National Bank Holdings
Performance |
| Timeline |
| INTER CARS SA |
| National Bank Holdings |
INTER CARS and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTER CARS and National Bank
The main advantage of trading using opposite INTER CARS and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTER CARS 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.| INTER CARS vs. Commercial Vehicle Group | INTER CARS vs. Zijin Mining Group | INTER CARS vs. GEELY AUTOMOBILE | INTER CARS vs. Grupo Carso SAB |
| National Bank vs. HomeToGo SE | National Bank vs. Autohome ADR | National Bank vs. CENTURIA OFFICE REIT | National Bank vs. American Homes 4 |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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