Correlation Between Zijin Mining and National Bank
Can any of the company-specific risk be diversified away by investing in both Zijin Mining 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 Zijin Mining and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Zijin Mining Group and National Bank Holdings, you can compare the effects of market volatilities on Zijin Mining 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 Zijin Mining with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zijin Mining and National Bank.
Diversification Opportunities for Zijin Mining and National Bank
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Zijin and National is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Zijin Mining 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 Zijin Mining 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 Zijin Mining 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 Zijin Mining i.e., Zijin Mining and National Bank go up and down completely randomly.
Pair Corralation between Zijin Mining and National Bank
Assuming the 90 days horizon Zijin Mining is expected to generate 4.71 times less return on investment than National Bank. In addition to that, Zijin Mining is 1.56 times more volatile than National Bank Holdings. It trades about 0.02 of its total potential returns per unit of risk. National Bank Holdings is currently generating about 0.13 per unit of volatility. If you would invest 3,256 in National Bank Holdings on August 29, 2024 and sell it today you would earn a total of 1,364 from holding National Bank Holdings or generate 41.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zijin Mining Group vs. National Bank Holdings
Performance |
| Timeline |
| Zijin Mining Group |
| National Bank Holdings |
Zijin Mining and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zijin Mining and National Bank
The main advantage of trading using opposite Zijin Mining and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zijin Mining 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.| Zijin Mining vs. BHP Group Limited | Zijin Mining vs. BHP Group Limited | Zijin Mining vs. Rio Tinto Group | Zijin Mining vs. Vale SA |
| National Bank vs. Austevoll Seafood ASA | National Bank vs. Webster Financial | National Bank vs. CONAGRA FOODS | National Bank vs. Beyond Meat |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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