Correlation Between Bank First and National Bank
Can any of the company-specific risk be diversified away by investing in both Bank First 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 Bank First and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank First National and National Bank Holdings, you can compare the effects of market volatilities on Bank First 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 Bank First with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank First and National Bank.
Diversification Opportunities for Bank First and National Bank
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bank and National is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Bank First National 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 Bank First 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 Bank First National 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 Bank First i.e., Bank First and National Bank go up and down completely randomly.
Pair Corralation between Bank First and National Bank
Considering the 90-day investment horizon Bank First is expected to generate 1.18 times less return on investment than National Bank. But when comparing it to its historical volatility, Bank First National is 1.1 times less risky than National Bank. It trades about 0.02 of its potential returns per unit of risk. National Bank Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 4,179 in National Bank Holdings on August 29, 2024 and sell it today you would earn a total of 694.00 from holding National Bank Holdings or generate 16.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank First National vs. National Bank Holdings
Performance |
| Timeline |
| Bank First National |
| National Bank Holdings |
Bank First and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank First and National Bank
The main advantage of trading using opposite Bank First and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank First 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.| Bank First vs. Fifth Third Bancorp | Bank First vs. Huntington Bancshares Incorporated | Bank First vs. MT Bank |
| National Bank vs. First Community | National Bank vs. Community West Bancshares | National Bank vs. First Financial Northwest | National Bank vs. First Northwest Bancorp |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |