Correlation Between North American and Pollard Banknote
Can any of the company-specific risk be diversified away by investing in both North American and Pollard Banknote 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 North American and Pollard Banknote into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North American Financial and Pollard Banknote Limited, you can compare the effects of market volatilities on North American and Pollard Banknote 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 North American with a short position of Pollard Banknote. Check out your portfolio center. Please also check ongoing floating volatility patterns of North American and Pollard Banknote.
Diversification Opportunities for North American and Pollard Banknote
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between North and Pollard is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding North American Financial and Pollard Banknote Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pollard Banknote and North American 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 North American Financial are associated (or correlated) with Pollard Banknote. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pollard Banknote has no effect on the direction of North American i.e., North American and Pollard Banknote go up and down completely randomly.
Pair Corralation between North American and Pollard Banknote
Assuming the 90 days trading horizon North American Financial is expected to generate 0.73 times more return on investment than Pollard Banknote. However, North American Financial is 1.37 times less risky than Pollard Banknote. It trades about 0.28 of its potential returns per unit of risk. Pollard Banknote Limited is currently generating about 0.13 per unit of risk. If you would invest 677.00 in North American Financial on September 1, 2024 and sell it today you would earn a total of 75.00 from holding North American Financial or generate 11.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North American Financial vs. Pollard Banknote Limited
Performance |
| Timeline |
| North American Financial |
| Pollard Banknote |
North American and Pollard Banknote Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North American and Pollard Banknote
The main advantage of trading using opposite North American and Pollard Banknote positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North American position performs unexpectedly, Pollard Banknote 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 Pollard Banknote will offset losses from the drop in Pollard Banknote's long position.| North American vs. Dividend Growth Split | North American vs. Dividend 15 Split | North American vs. Financial 15 Split | North American vs. Dividend 15 Split |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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