Correlation Between Big Bird and National Bank
Can any of the company-specific risk be diversified away by investing in both Big Bird 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 Big Bird and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Big Bird Foods and National Bank of, you can compare the effects of market volatilities on Big Bird 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 Big Bird with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Big Bird and National Bank.
Diversification Opportunities for Big Bird and National Bank
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Big and National is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Big Bird 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 Big Bird 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 Big Bird 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 Big Bird i.e., Big Bird and National Bank go up and down completely randomly.
Pair Corralation between Big Bird and National Bank
Assuming the 90 days trading horizon Big Bird Foods is expected to under-perform the National Bank. In addition to that, Big Bird is 1.08 times more volatile than National Bank of. It trades about -0.11 of its total potential returns per unit of risk. National Bank of is currently generating about -0.09 per unit of volatility. If you would invest 6,751 in National Bank of on August 27, 2024 and sell it today you would lose (400.00) from holding National Bank of or give up 5.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Big Bird Foods vs. National Bank of
Performance |
| Timeline |
| Big Bird Foods |
| National Bank |
Big Bird and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Big Bird and National Bank
The main advantage of trading using opposite Big Bird and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Big Bird 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.| Big Bird vs. Habib Insurance | Big Bird vs. Ghandhara Automobile | Big Bird vs. Century Insurance | Big Bird vs. Reliance Weaving Mills |
| National Bank vs. Big Bird Foods | National Bank vs. Amreli Steels | National Bank vs. Crescent Steel Allied | National Bank vs. Ghandhara Automobile |
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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