Correlation Between Century Next and National Bank
Can any of the company-specific risk be diversified away by investing in both Century Next 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 Century Next and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Next Financial and National Bank of, you can compare the effects of market volatilities on Century Next 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 Century Next with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Next and National Bank.
Diversification Opportunities for Century Next and National Bank
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Century and National is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Century Next Financial and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and Century Next 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 Century Next Financial 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 Century Next i.e., Century Next and National Bank go up and down completely randomly.
Pair Corralation between Century Next and National Bank
Given the investment horizon of 90 days Century Next Financial is expected to generate 0.35 times more return on investment than National Bank. However, Century Next Financial is 2.83 times less risky than National Bank. It trades about 0.12 of its potential returns per unit of risk. National Bank of is currently generating about 0.04 per unit of risk. If you would invest 2,913 in Century Next Financial on November 4, 2024 and sell it today you would earn a total of 987.00 from holding Century Next Financial or generate 33.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 87.85% |
| Values | Daily Returns |
Century Next Financial vs. National Bank of
Performance |
| Timeline |
| Century Next Financial |
| National Bank |
Century Next and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Next and National Bank
The main advantage of trading using opposite Century Next and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Next 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.| Century Next vs. Citizens Financial Corp | Century Next vs. Triad Business Bank | Century Next vs. First Ottawa Bancshares | Century Next vs. CCSB Financial Corp |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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