Correlation Between Caribbean Utilities and National Bank
Can any of the company-specific risk be diversified away by investing in both Caribbean Utilities 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 Caribbean Utilities and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caribbean Utilities and National Bank of, you can compare the effects of market volatilities on Caribbean Utilities 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 Caribbean Utilities with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caribbean Utilities and National Bank.
Diversification Opportunities for Caribbean Utilities and National Bank
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caribbean and National is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Caribbean Utilities and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and Caribbean Utilities 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 Caribbean Utilities 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 Caribbean Utilities i.e., Caribbean Utilities and National Bank go up and down completely randomly.
Pair Corralation between Caribbean Utilities and National Bank
Assuming the 90 days trading horizon Caribbean Utilities is expected to generate 1.51 times less return on investment than National Bank. In addition to that, Caribbean Utilities is 1.15 times more volatile than National Bank of. It trades about 0.08 of its total potential returns per unit of risk. National Bank of is currently generating about 0.13 per unit of volatility. If you would invest 1,607 in National Bank of on September 1, 2024 and sell it today you would earn a total of 802.00 from holding National Bank of or generate 49.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.56% |
| Values | Daily Returns |
Caribbean Utilities vs. National Bank of
Performance |
| Timeline |
| Caribbean Utilities |
| National Bank |
Caribbean Utilities and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caribbean Utilities and National Bank
The main advantage of trading using opposite Caribbean Utilities and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caribbean Utilities 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.| Caribbean Utilities vs. Maxim Power Corp | Caribbean Utilities vs. ATCO | Caribbean Utilities vs. Capstone Infrastructure Corp | Caribbean Utilities vs. Richards Packaging Income |
| National Bank vs. Gatos Silver | National Bank vs. Andlauer Healthcare Gr | National Bank vs. Bausch Health Companies | National Bank vs. Leveljump Healthcare Corp |
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 Stocks Directory module to find actively traded stocks across global markets.
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