Correlation Between National Bank and Apple
Can any of the company-specific risk be diversified away by investing in both National Bank and Apple 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 National Bank and Apple into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank of and Apple Inc CDR, you can compare the effects of market volatilities on National Bank and Apple 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 National Bank with a short position of Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Apple.
Diversification Opportunities for National Bank and Apple
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Apple is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Apple Inc CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc CDR and National Bank 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 National Bank of are associated (or correlated) with Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc CDR has no effect on the direction of National Bank i.e., National Bank and Apple go up and down completely randomly.
Pair Corralation between National Bank and Apple
Assuming the 90 days trading horizon National Bank is expected to generate 1.42 times less return on investment than Apple. But when comparing it to its historical volatility, National Bank of is 1.75 times less risky than Apple. It trades about 0.09 of its potential returns per unit of risk. Apple Inc CDR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,172 in Apple Inc CDR on September 3, 2024 and sell it today you would earn a total of 1,303 from holding Apple Inc CDR or generate 59.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank of vs. Apple Inc CDR
Performance |
| Timeline |
| National Bank |
| Apple Inc CDR |
National Bank and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Apple
The main advantage of trading using opposite National Bank and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple's long position.| National Bank vs. Apple Inc CDR | National Bank vs. Microsoft Corp CDR | National Bank vs. Amazon CDR | National Bank vs. Alphabet Inc CDR |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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