Correlation Between National Capital and Bancolombia
Can any of the company-specific risk be diversified away by investing in both National Capital and Bancolombia 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 Capital and Bancolombia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Capital Bank and Bancolombia SA ADR, you can compare the effects of market volatilities on National Capital and Bancolombia 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 Capital with a short position of Bancolombia. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Capital and Bancolombia.
Diversification Opportunities for National Capital and Bancolombia
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Bancolombia is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding National Capital Bank and Bancolombia SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bancolombia SA ADR and National Capital 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 Capital Bank are associated (or correlated) with Bancolombia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bancolombia SA ADR has no effect on the direction of National Capital i.e., National Capital and Bancolombia go up and down completely randomly.
Pair Corralation between National Capital and Bancolombia
Given the investment horizon of 90 days National Capital Bank is expected to generate 86.32 times more return on investment than Bancolombia. However, National Capital is 86.32 times more volatile than Bancolombia SA ADR. It trades about 0.37 of its potential returns per unit of risk. Bancolombia SA ADR is currently generating about -0.01 per unit of risk. If you would invest 17,300 in National Capital Bank on September 1, 2024 and sell it today you would lose (8,800) from holding National Capital Bank or give up 50.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.21% |
| Values | Daily Returns |
National Capital Bank vs. Bancolombia SA ADR
Performance |
| Timeline |
| National Capital Bank |
| Bancolombia SA ADR |
National Capital and Bancolombia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Capital and Bancolombia
The main advantage of trading using opposite National Capital and Bancolombia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Capital position performs unexpectedly, Bancolombia 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 Bancolombia will offset losses from the drop in Bancolombia's long position.| National Capital vs. Delhi Bank Corp | National Capital vs. CCSB Financial Corp | National Capital vs. Bank of Utica | National Capital vs. BEO Bancorp |
| Bancolombia vs. Banco De Chile | Bancolombia vs. Banco Bradesco SA | Bancolombia vs. Banco Santander Chile | Bancolombia vs. Intercorp Financial Services |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |