Correlation Between Associated British and National Bank
Can any of the company-specific risk be diversified away by investing in both Associated British 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 Associated British and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and National Bank of, you can compare the effects of market volatilities on Associated British 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 Associated British with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and National Bank.
Diversification Opportunities for Associated British and National Bank
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Associated and National is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and Associated British 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 Associated British Foods 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 has no effect on the direction of Associated British i.e., Associated British and National Bank go up and down completely randomly.
Pair Corralation between Associated British and National Bank
Assuming the 90 days trading horizon Associated British Foods is expected to generate 1.04 times more return on investment than National Bank. However, Associated British is 1.04 times more volatile than National Bank of. It trades about 0.04 of its potential returns per unit of risk. National Bank of is currently generating about 0.03 per unit of risk. If you would invest 175,819 in Associated British Foods on September 19, 2024 and sell it today you would earn a total of 31,381 from holding Associated British Foods or generate 17.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Associated British Foods vs. National Bank of
Performance |
| Timeline |
| Associated British Foods |
| National Bank |
Associated British and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and National Bank
The main advantage of trading using opposite Associated British and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British 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.| Associated British vs. Samsung Electronics Co | Associated British vs. Samsung Electronics Co | Associated British vs. Hyundai Motor | Associated British vs. Toyota Motor Corp |
| National Bank vs. Samsung Electronics Co | National Bank vs. Samsung Electronics Co | National Bank vs. Hyundai Motor | National Bank vs. Reliance Industries Ltd |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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