Correlation Between National Bank and TeraGo
Can any of the company-specific risk be diversified away by investing in both National Bank and TeraGo 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 TeraGo 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 TeraGo Inc, you can compare the effects of market volatilities on National Bank and TeraGo 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 TeraGo. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and TeraGo.
Diversification Opportunities for National Bank and TeraGo
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between National and TeraGo is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and TeraGo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TeraGo Inc 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 TeraGo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TeraGo Inc has no effect on the direction of National Bank i.e., National Bank and TeraGo go up and down completely randomly.
Pair Corralation between National Bank and TeraGo
Assuming the 90 days horizon National Bank of is expected to generate 0.18 times more return on investment than TeraGo. However, National Bank of is 5.41 times less risky than TeraGo. It trades about 0.1 of its potential returns per unit of risk. TeraGo Inc is currently generating about 0.0 per unit of risk. If you would invest 8,540 in National Bank of on September 4, 2024 and sell it today you would earn a total of 5,457 from holding National Bank of or generate 63.9% 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. TeraGo Inc
Performance |
| Timeline |
| National Bank |
| TeraGo Inc |
National Bank and TeraGo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and TeraGo
The main advantage of trading using opposite National Bank and TeraGo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, TeraGo 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 TeraGo will offset losses from the drop in TeraGo'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 |
| TeraGo vs. Evertz Technologies Limited | TeraGo vs. Vecima Networks | TeraGo vs. EcoSynthetix | TeraGo vs. Baylin Technologies |
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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