Correlation Between Chiba Bank and National Bank
Can any of the company-specific risk be diversified away by investing in both Chiba Bank 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 Chiba Bank and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chiba Bank and National Bank Holdings, you can compare the effects of market volatilities on Chiba Bank 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 Chiba Bank with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chiba Bank and National Bank.
Diversification Opportunities for Chiba Bank and National Bank
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chiba and National is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Chiba Bank 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 Chiba Bank 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 Chiba Bank 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 Chiba Bank i.e., Chiba Bank and National Bank go up and down completely randomly.
Pair Corralation between Chiba Bank and National Bank
Assuming the 90 days horizon Chiba Bank is expected to generate 1.29 times less return on investment than National Bank. In addition to that, Chiba Bank is 1.1 times more volatile than National Bank Holdings. It trades about 0.04 of its total potential returns per unit of risk. National Bank Holdings is currently generating about 0.06 per unit of volatility. If you would invest 3,026 in National Bank Holdings on August 31, 2024 and sell it today you would earn a total of 1,445 from holding National Bank Holdings or generate 47.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chiba Bank vs. National Bank Holdings
Performance |
| Timeline |
| Chiba Bank |
| National Bank Holdings |
Chiba Bank and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chiba Bank and National Bank
The main advantage of trading using opposite Chiba Bank and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chiba Bank 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.| Chiba Bank vs. SIVERS SEMICONDUCTORS AB | Chiba Bank vs. Darden Restaurants | Chiba Bank vs. Reliance Steel Aluminum | Chiba Bank vs. Q2M Managementberatung AG |
| National Bank vs. Fifth Third Bancorp | National Bank vs. Regions Financial | National Bank vs. Superior Plus Corp | National Bank vs. Origin Agritech |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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