Correlation Between Liberty Northwest and National Capital
Can any of the company-specific risk be diversified away by investing in both Liberty Northwest and National Capital 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 Liberty Northwest and National Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Northwest Bancorp and National Capital Bank, you can compare the effects of market volatilities on Liberty Northwest and National Capital 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 Liberty Northwest with a short position of National Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Northwest and National Capital.
Diversification Opportunities for Liberty Northwest and National Capital
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Liberty and National is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Northwest Bancorp and National Capital Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Capital Bank and Liberty Northwest 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 Liberty Northwest Bancorp are associated (or correlated) with National Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Capital Bank has no effect on the direction of Liberty Northwest i.e., Liberty Northwest and National Capital go up and down completely randomly.
Pair Corralation between Liberty Northwest and National Capital
Given the investment horizon of 90 days Liberty Northwest is expected to generate 7.86 times less return on investment than National Capital. In addition to that, Liberty Northwest is 3.24 times more volatile than National Capital Bank. It trades about 0.01 of its total potential returns per unit of risk. National Capital Bank is currently generating about 0.26 per unit of volatility. If you would invest 6,300 in National Capital Bank on November 5, 2024 and sell it today you would earn a total of 200.00 from holding National Capital Bank or generate 3.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Liberty Northwest Bancorp vs. National Capital Bank
Performance |
| Timeline |
| Liberty Northwest Bancorp |
| National Capital Bank |
Liberty Northwest and National Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Northwest and National Capital
The main advantage of trading using opposite Liberty Northwest and National Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Northwest position performs unexpectedly, National Capital 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 Capital will offset losses from the drop in National Capital's long position.| Liberty Northwest vs. flyExclusive, | Liberty Northwest vs. TFI International | Liberty Northwest vs. Triumph Apparel | Liberty Northwest vs. Levi Strauss Co |
| National Capital vs. Delhi Bank Corp | National Capital vs. CCSB Financial Corp | National Capital vs. Bank of Utica | National Capital vs. BEO Bancorp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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