Correlation Between National Bank and Great Wes
Can any of the company-specific risk be diversified away by investing in both National Bank and Great Wes 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 Great Wes 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 Great Wes 515, you can compare the effects of market volatilities on National Bank and Great Wes 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 Great Wes. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Great Wes.
Diversification Opportunities for National Bank and Great Wes
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between National and Great is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Great Wes 515 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Wes 515 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 Great Wes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Wes 515 has no effect on the direction of National Bank i.e., National Bank and Great Wes go up and down completely randomly.
Pair Corralation between National Bank and Great Wes
Assuming the 90 days trading horizon National Bank of is expected to generate 0.9 times more return on investment than Great Wes. However, National Bank of is 1.11 times less risky than Great Wes. It trades about 0.35 of its potential returns per unit of risk. Great Wes 515 is currently generating about -0.17 per unit of risk. If you would invest 2,321 in National Bank of on August 28, 2024 and sell it today you would earn a total of 79.00 from holding National Bank of or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank of vs. Great Wes 515
Performance |
| Timeline |
| National Bank |
| Great Wes 515 |
National Bank and Great Wes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Great Wes
The main advantage of trading using opposite National Bank and Great Wes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Great Wes 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 Great Wes will offset losses from the drop in Great Wes' long position.| National Bank vs. Forstrong Global Income | National Bank vs. BMO Aggregate Bond | National Bank vs. Terreno Resources Corp | National Bank vs. iShares Canadian HYBrid |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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