Correlation Between Commercial Vehicle and National Bank
Can any of the company-specific risk be diversified away by investing in both Commercial Vehicle 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 Vehicle 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 Vehicle Group and National Bank Holdings, you can compare the effects of market volatilities on Commercial Vehicle 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 Vehicle with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commercial Vehicle and National Bank.
Diversification Opportunities for Commercial Vehicle and National Bank
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Commercial and National is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Commercial Vehicle Group 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 Commercial Vehicle 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 Vehicle Group 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 Commercial Vehicle i.e., Commercial Vehicle and National Bank go up and down completely randomly.
Pair Corralation between Commercial Vehicle and National Bank
Assuming the 90 days trading horizon Commercial Vehicle Group is expected to under-perform the National Bank. In addition to that, Commercial Vehicle is 1.12 times more volatile than National Bank Holdings. It trades about -0.2 of its total potential returns per unit of risk. National Bank Holdings is currently generating about 0.14 per unit of volatility. If you would invest 4,094 in National Bank Holdings on September 1, 2024 and sell it today you would earn a total of 377.00 from holding National Bank Holdings or generate 9.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commercial Vehicle Group vs. National Bank Holdings
Performance |
| Timeline |
| Commercial Vehicle |
| National Bank Holdings |
Commercial Vehicle and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commercial Vehicle and National Bank
The main advantage of trading using opposite Commercial Vehicle and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commercial Vehicle 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.| Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc | Commercial Vehicle vs. Apple Inc |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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