Correlation Between National Bank and Timbercreek Financial
Can any of the company-specific risk be diversified away by investing in both National Bank and Timbercreek Financial 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 Timbercreek Financial 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 Timbercreek Financial Corp, you can compare the effects of market volatilities on National Bank and Timbercreek Financial 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 Timbercreek Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Timbercreek Financial.
Diversification Opportunities for National Bank and Timbercreek Financial
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between National and Timbercreek is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Timbercreek Financial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timbercreek Financial 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 Timbercreek Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timbercreek Financial has no effect on the direction of National Bank i.e., National Bank and Timbercreek Financial go up and down completely randomly.
Pair Corralation between National Bank and Timbercreek Financial
Assuming the 90 days trading horizon National Bank is expected to generate 1.23 times less return on investment than Timbercreek Financial. In addition to that, National Bank is 1.11 times more volatile than Timbercreek Financial Corp. It trades about 0.06 of its total potential returns per unit of risk. Timbercreek Financial Corp is currently generating about 0.09 per unit of volatility. If you would invest 678.00 in Timbercreek Financial Corp on September 1, 2024 and sell it today you would earn a total of 87.00 from holding Timbercreek Financial Corp or generate 12.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank of vs. Timbercreek Financial Corp
Performance |
| Timeline |
| National Bank |
| Timbercreek Financial |
National Bank and Timbercreek Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Timbercreek Financial
The main advantage of trading using opposite National Bank and Timbercreek Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Timbercreek Financial 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 Timbercreek Financial will offset losses from the drop in Timbercreek Financial's 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 |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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