Correlation Between Commercial National and QNB Corp
Can any of the company-specific risk be diversified away by investing in both Commercial National and QNB Corp 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 Commercial National and QNB Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial National Financial and QNB Corp, you can compare the effects of market volatilities on Commercial National and QNB Corp 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 Commercial National with a short position of QNB Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial National and QNB Corp.
Diversification Opportunities for Commercial National and QNB Corp
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Commercial and QNB is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Commercial National Financial and QNB Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QNB Corp and Commercial National 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 Commercial National Financial are associated (or correlated) with QNB Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QNB Corp has no effect on the direction of Commercial National i.e., Commercial National and QNB Corp go up and down completely randomly.
Pair Corralation between Commercial National and QNB Corp
Given the investment horizon of 90 days Commercial National is expected to generate 1.45 times less return on investment than QNB Corp. In addition to that, Commercial National is 2.33 times more volatile than QNB Corp. It trades about 0.1 of its total potential returns per unit of risk. QNB Corp is currently generating about 0.35 per unit of volatility. If you would invest 3,395 in QNB Corp on December 1, 2024 and sell it today you would earn a total of 155.00 from holding QNB Corp or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial National Financial vs. QNB Corp
Performance |
| Timeline |
| Commercial National |
| QNB Corp |
Commercial National and QNB Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial National and QNB Corp
The main advantage of trading using opposite Commercial National and QNB Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial National position performs unexpectedly, QNB Corp 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 QNB Corp will offset losses from the drop in QNB Corp's long position.| Commercial National vs. Eastern Michigan Financial | Commercial National vs. Mifflinburg Bancorp | Commercial National vs. Apollo Bancorp | Commercial National vs. Community Bankers |
| QNB Corp vs. Eastern Michigan Financial | QNB Corp vs. Commercial National Financial | QNB Corp vs. Mifflinburg Bancorp | QNB Corp vs. Apollo 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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