Correlation Between Medical Packaging and National Bank
Can any of the company-specific risk be diversified away by investing in both Medical Packaging 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 Medical Packaging and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Medical Packaging and National Bank, you can compare the effects of market volatilities on Medical Packaging 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 Medical Packaging with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Medical Packaging and National Bank.
Diversification Opportunities for Medical Packaging and National Bank
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Medical and National is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Medical Packaging and National Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and Medical Packaging 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 Medical Packaging 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 has no effect on the direction of Medical Packaging i.e., Medical Packaging and National Bank go up and down completely randomly.
Pair Corralation between Medical Packaging and National Bank
Assuming the 90 days trading horizon Medical Packaging is expected to generate 2.52 times more return on investment than National Bank. However, Medical Packaging is 2.52 times more volatile than National Bank. It trades about 0.06 of its potential returns per unit of risk. National Bank is currently generating about -0.05 per unit of risk. If you would invest 71.00 in Medical Packaging on September 12, 2024 and sell it today you would earn a total of 53.00 from holding Medical Packaging or generate 74.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 75.0% |
| Values | Daily Returns |
Medical Packaging vs. National Bank
Performance |
| Timeline |
| Medical Packaging |
| National Bank |
Medical Packaging and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Medical Packaging and National Bank
The main advantage of trading using opposite Medical Packaging and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Medical Packaging 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.| Medical Packaging vs. Paint Chemicals Industries | Medical Packaging vs. Reacap Financial Investments | Medical Packaging vs. Egyptians For Investment | Medical Packaging vs. Misr Oils Soap |
| National Bank vs. Paint Chemicals Industries | National Bank vs. Reacap Financial Investments | National Bank vs. Egyptians For Investment | National Bank vs. Misr Oils Soap |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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