Correlation Between National Bank and Caribbean Utilities
Can any of the company-specific risk be diversified away by investing in both National Bank and Caribbean Utilities 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 Caribbean Utilities 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 Caribbean Utilities, you can compare the effects of market volatilities on National Bank and Caribbean Utilities 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 Caribbean Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Caribbean Utilities.
Diversification Opportunities for National Bank and Caribbean Utilities
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between National and Caribbean is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Caribbean Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caribbean Utilities 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 Caribbean Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caribbean Utilities has no effect on the direction of National Bank i.e., National Bank and Caribbean Utilities go up and down completely randomly.
Pair Corralation between National Bank and Caribbean Utilities
Assuming the 90 days trading horizon National Bank of is expected to generate 0.4 times more return on investment than Caribbean Utilities. However, National Bank of is 2.51 times less risky than Caribbean Utilities. It trades about 0.25 of its potential returns per unit of risk. Caribbean Utilities is currently generating about 0.04 per unit of risk. If you would invest 2,353 in National Bank of on September 1, 2024 and sell it today you would earn a total of 56.00 from holding National Bank of or generate 2.38% 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. Caribbean Utilities
Performance |
| Timeline |
| National Bank |
| Caribbean Utilities |
National Bank and Caribbean Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Caribbean Utilities
The main advantage of trading using opposite National Bank and Caribbean Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Caribbean Utilities 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 Caribbean Utilities will offset losses from the drop in Caribbean Utilities' long position.| National Bank vs. Gatos Silver | National Bank vs. Andlauer Healthcare Gr | National Bank vs. Bausch Health Companies | National Bank vs. Leveljump Healthcare Corp |
| Caribbean Utilities vs. Maxim Power Corp | Caribbean Utilities vs. ATCO | Caribbean Utilities vs. Capstone Infrastructure Corp | Caribbean Utilities vs. Richards Packaging Income |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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