Correlation Between National Bank and Power Financial
Can any of the company-specific risk be diversified away by investing in both National Bank and Power 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 Power 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 Power Financial 51, you can compare the effects of market volatilities on National Bank and Power 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 Power Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Power Financial.
Diversification Opportunities for National Bank and Power Financial
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between National and Power is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Power Financial 51 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Financial 51 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 Power Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Financial 51 has no effect on the direction of National Bank i.e., National Bank and Power Financial go up and down completely randomly.
Pair Corralation between National Bank and Power Financial
Assuming the 90 days horizon National Bank of is expected to under-perform the Power Financial. In addition to that, National Bank is 1.82 times more volatile than Power Financial 51. It trades about -0.37 of its total potential returns per unit of risk. Power Financial 51 is currently generating about 0.16 per unit of volatility. If you would invest 2,132 in Power Financial 51 on November 22, 2024 and sell it today you would earn a total of 30.00 from holding Power Financial 51 or generate 1.41% 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. Power Financial 51
Performance |
| Timeline |
| National Bank |
| Power Financial 51 |
National Bank and Power Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Power Financial
The main advantage of trading using opposite National Bank and Power Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Power 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 Power Financial will offset losses from the drop in Power Financial's long position.| National Bank vs. Canadian Imperial Bank | National Bank vs. Bank of Montreal | National Bank vs. Royal Bank of | National Bank vs. Bank of Nova |
| Power Financial vs. Manulife Financial Corp | Power Financial vs. Sun Life Non | Power Financial vs. Power Fi 440 | Power Financial vs. Great Wes 515 |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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