Correlation Between National Bank and Advantage Oil
Can any of the company-specific risk be diversified away by investing in both National Bank and Advantage Oil 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 Advantage Oil 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 Advantage Oil Gas, you can compare the effects of market volatilities on National Bank and Advantage Oil 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 Advantage Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Advantage Oil.
Diversification Opportunities for National Bank and Advantage Oil
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Advantage is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Advantage Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advantage Oil Gas 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 Advantage Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advantage Oil Gas has no effect on the direction of National Bank i.e., National Bank and Advantage Oil go up and down completely randomly.
Pair Corralation between National Bank and Advantage Oil
Assuming the 90 days trading horizon National Bank is expected to generate 3.24 times less return on investment than Advantage Oil. But when comparing it to its historical volatility, National Bank of is 7.7 times less risky than Advantage Oil. It trades about 0.19 of its potential returns per unit of risk. Advantage Oil Gas is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 867.00 in Advantage Oil Gas on September 3, 2024 and sell it today you would earn a total of 33.00 from holding Advantage Oil Gas or generate 3.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank of vs. Advantage Oil Gas
Performance |
| Timeline |
| National Bank |
| Advantage Oil Gas |
National Bank and Advantage Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Advantage Oil
The main advantage of trading using opposite National Bank and Advantage Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Advantage Oil 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 Advantage Oil will offset losses from the drop in Advantage Oil'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 Global Correlations module to find global opportunities by holding instruments from different markets.
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