Correlation Between National Bank and Bri Chem
Can any of the company-specific risk be diversified away by investing in both National Bank and Bri Chem 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 Bri Chem 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 Bri Chem Corp, you can compare the effects of market volatilities on National Bank and Bri Chem 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 Bri Chem. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Bri Chem.
Diversification Opportunities for National Bank and Bri Chem
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between National and Bri is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Bri Chem Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bri Chem Corp 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 Bri Chem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bri Chem Corp has no effect on the direction of National Bank i.e., National Bank and Bri Chem go up and down completely randomly.
Pair Corralation between National Bank and Bri Chem
Assuming the 90 days trading horizon National Bank is expected to generate 17.1 times less return on investment than Bri Chem. But when comparing it to its historical volatility, National Bank of is 28.23 times less risky than Bri Chem. It trades about 0.13 of its potential returns per unit of risk. Bri Chem Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 23.00 in Bri Chem Corp on September 4, 2024 and sell it today you would earn a total of 2.00 from holding Bri Chem Corp or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank of vs. Bri Chem Corp
Performance |
| Timeline |
| National Bank |
| Bri Chem Corp |
National Bank and Bri Chem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Bri Chem
The main advantage of trading using opposite National Bank and Bri Chem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Bri Chem 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 Bri Chem will offset losses from the drop in Bri Chem's long position.| National Bank vs. Ramp Metals | National Bank vs. Mako Mining Corp | National Bank vs. Cogeco Communications | National Bank vs. Medical Facilities |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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