Correlation Between TAL Education and National Bank
Can any of the company-specific risk be diversified away by investing in both TAL Education 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 TAL Education and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TAL Education Group and National Bank Holdings, you can compare the effects of market volatilities on TAL Education 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 TAL Education with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of TAL Education and National Bank.
Diversification Opportunities for TAL Education and National Bank
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between TAL and National is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding TAL Education 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 TAL Education 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 TAL Education 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 TAL Education i.e., TAL Education and National Bank go up and down completely randomly.
Pair Corralation between TAL Education and National Bank
Assuming the 90 days horizon TAL Education Group is expected to under-perform the National Bank. In addition to that, TAL Education is 1.18 times more volatile than National Bank Holdings. It trades about -0.07 of its total potential returns per unit of risk. National Bank Holdings is currently generating about 0.03 per unit of volatility. If you would invest 3,994 in National Bank Holdings on September 26, 2024 and sell it today you would earn a total of 66.00 from holding National Bank Holdings or generate 1.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TAL Education Group vs. National Bank Holdings
Performance |
| Timeline |
| TAL Education Group |
| National Bank Holdings |
TAL Education and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TAL Education and National Bank
The main advantage of trading using opposite TAL Education and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TAL Education 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.| TAL Education vs. National Bank Holdings | TAL Education vs. Ameriprise Financial | TAL Education vs. ARDAGH METAL PACDL 0001 | TAL Education vs. ETFS Coffee ETC |
| National Bank vs. MITSUBISHI STEEL MFG | National Bank vs. KRAKATAU STEEL B | National Bank vs. NIPPON STEEL SPADR | National Bank vs. COSMOSTEEL HLDGS |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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