Correlation Between Banque Nationale and Compagnie
Can any of the company-specific risk be diversified away by investing in both Banque Nationale and Compagnie 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 Banque Nationale and Compagnie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banque nationale de and Compagnie d Entreprises, you can compare the effects of market volatilities on Banque Nationale and Compagnie 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 Banque Nationale with a short position of Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banque Nationale and Compagnie.
Diversification Opportunities for Banque Nationale and Compagnie
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Banque and Compagnie is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Banque nationale de and Compagnie d Entreprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie d Entreprises and Banque Nationale 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 Banque nationale de are associated (or correlated) with Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie d Entreprises has no effect on the direction of Banque Nationale i.e., Banque Nationale and Compagnie go up and down completely randomly.
Pair Corralation between Banque Nationale and Compagnie
Assuming the 90 days trading horizon Banque nationale de is expected to generate 0.69 times more return on investment than Compagnie. However, Banque nationale de is 1.44 times less risky than Compagnie. It trades about -0.17 of its potential returns per unit of risk. Compagnie d Entreprises is currently generating about -0.12 per unit of risk. If you would invest 42,000 in Banque nationale de on August 26, 2024 and sell it today you would lose (1,700) from holding Banque nationale de or give up 4.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banque nationale de vs. Compagnie d Entreprises
Performance |
| Timeline |
| Banque nationale |
| Compagnie d Entreprises |
Banque Nationale and Compagnie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banque Nationale and Compagnie
The main advantage of trading using opposite Banque Nationale and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banque Nationale position performs unexpectedly, Compagnie 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 Compagnie will offset losses from the drop in Compagnie's long position.| Banque Nationale vs. GIMV NV | Banque Nationale vs. Sofina Socit Anonyme | Banque Nationale vs. Groep Brussel Lambert | Banque Nationale vs. Tubize Fin |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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