Correlation Between National Bank and GDI Integrated
Can any of the company-specific risk be diversified away by investing in both National Bank and GDI Integrated 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 GDI Integrated 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 GDI Integrated, you can compare the effects of market volatilities on National Bank and GDI Integrated 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 GDI Integrated. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and GDI Integrated.
Diversification Opportunities for National Bank and GDI Integrated
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and GDI is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and GDI Integrated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GDI Integrated 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 GDI Integrated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GDI Integrated has no effect on the direction of National Bank i.e., National Bank and GDI Integrated go up and down completely randomly.
Pair Corralation between National Bank and GDI Integrated
Assuming the 90 days trading horizon National Bank is expected to generate 13.98 times less return on investment than GDI Integrated. But when comparing it to its historical volatility, National Bank of is 8.0 times less risky than GDI Integrated. It trades about 0.08 of its potential returns per unit of risk. GDI Integrated is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,450 in GDI Integrated on August 26, 2024 and sell it today you would earn a total of 163.00 from holding GDI Integrated or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank of vs. GDI Integrated
Performance |
| Timeline |
| National Bank |
| GDI Integrated |
National Bank and GDI Integrated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and GDI Integrated
The main advantage of trading using opposite National Bank and GDI Integrated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, GDI Integrated 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 GDI Integrated will offset losses from the drop in GDI Integrated's long position.| National Bank vs. Partners Value Investments | National Bank vs. CNJ Capital Investments | National Bank vs. Medical Facilities | National Bank vs. Rogers Communications |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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