Correlation Between Commercial International and National Bank
Can any of the company-specific risk be diversified away by investing in both Commercial International 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 Commercial International and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commercial International Bank Egypt and National Bank, you can compare the effects of market volatilities on Commercial International 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 Commercial International with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial International and National Bank.
Diversification Opportunities for Commercial International and National Bank
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Commercial and National is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Commercial International Bank and National Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and Commercial International 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 International Bank Egypt 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 has no effect on the direction of Commercial International i.e., Commercial International and National Bank go up and down completely randomly.
Pair Corralation between Commercial International and National Bank
Assuming the 90 days trading horizon Commercial International Bank Egypt is expected to generate 1.29 times more return on investment than National Bank. However, Commercial International is 1.29 times more volatile than National Bank. It trades about 0.05 of its potential returns per unit of risk. National Bank is currently generating about -0.05 per unit of risk. If you would invest 5,311 in Commercial International Bank Egypt on November 19, 2024 and sell it today you would earn a total of 2,488 from holding Commercial International Bank Egypt or generate 46.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Commercial International Bank vs. National Bank
Performance |
| Timeline |
| Commercial International |
| National Bank |
Commercial International and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial International and National Bank
The main advantage of trading using opposite Commercial International and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial International 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.The idea behind Commercial International Bank Egypt and National Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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