Correlation Between BankFinancial and National Bank
Can any of the company-specific risk be diversified away by investing in both BankFinancial 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 BankFinancial and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BankFinancial and National Bank Holdings, you can compare the effects of market volatilities on BankFinancial 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 BankFinancial with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of BankFinancial and National Bank.
Diversification Opportunities for BankFinancial and National Bank
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BankFinancial and National is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding BankFinancial 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 BankFinancial 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 BankFinancial 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 BankFinancial i.e., BankFinancial and National Bank go up and down completely randomly.
Pair Corralation between BankFinancial and National Bank
Given the investment horizon of 90 days BankFinancial is expected to generate 0.77 times more return on investment than National Bank. However, BankFinancial is 1.29 times less risky than National Bank. It trades about 0.05 of its potential returns per unit of risk. National Bank Holdings is currently generating about 0.02 per unit of risk. If you would invest 957.00 in BankFinancial on November 2, 2024 and sell it today you would earn a total of 385.00 from holding BankFinancial or generate 40.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
BankFinancial vs. National Bank Holdings
Performance |
| Timeline |
| BankFinancial |
| National Bank Holdings |
BankFinancial and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BankFinancial and National Bank
The main advantage of trading using opposite BankFinancial and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BankFinancial 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.| BankFinancial vs. First Business Financial | BankFinancial vs. Old Point Financial | BankFinancial vs. Parke Bancorp | BankFinancial vs. Community West Bancshares |
| 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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