Correlation Between Dassault Systèmes and National Bank
Can any of the company-specific risk be diversified away by investing in both Dassault Systèmes 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 Dassault Systèmes and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dassault Systmes SE and National Bank Holdings, you can compare the effects of market volatilities on Dassault Systèmes 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 Dassault Systèmes with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dassault Systèmes and National Bank.
Diversification Opportunities for Dassault Systèmes and National Bank
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dassault and National is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dassault Systmes SE 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 Dassault Systèmes 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 Dassault Systmes SE 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 Dassault Systèmes i.e., Dassault Systèmes and National Bank go up and down completely randomly.
Pair Corralation between Dassault Systèmes and National Bank
Assuming the 90 days horizon Dassault Systmes SE is expected to generate 0.8 times more return on investment than National Bank. However, Dassault Systmes SE is 1.25 times less risky than National Bank. It trades about 0.07 of its potential returns per unit of risk. National Bank Holdings is currently generating about 0.03 per unit of risk. If you would invest 3,280 in Dassault Systmes SE on December 4, 2024 and sell it today you would earn a total of 480.00 from holding Dassault Systmes SE or generate 14.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dassault Systmes SE vs. National Bank Holdings
Performance |
| Timeline |
| Dassault Systèmes |
| National Bank Holdings |
Dassault Systèmes and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dassault Systèmes and National Bank
The main advantage of trading using opposite Dassault Systèmes and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dassault Systèmes 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.| Dassault Systèmes vs. Sligro Food Group | Dassault Systèmes vs. GURU ORGANIC ENERGY | Dassault Systèmes vs. CN MODERN DAIRY | Dassault Systèmes vs. United Natural Foods |
| National Bank vs. Dalata Hotel Group | National Bank vs. Tower Semiconductor | National Bank vs. Hyatt Hotels | National Bank vs. MagnaChip Semiconductor 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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