Correlation Between National Capital and Exchange Bankshares
Can any of the company-specific risk be diversified away by investing in both National Capital and Exchange Bankshares 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 Exchange Bankshares 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 Exchange Bankshares, you can compare the effects of market volatilities on National Capital and Exchange Bankshares 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 Exchange Bankshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Capital and Exchange Bankshares.
Diversification Opportunities for National Capital and Exchange Bankshares
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Exchange is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding National Capital Bank and Exchange Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exchange Bankshares 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 Exchange Bankshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exchange Bankshares has no effect on the direction of National Capital i.e., National Capital and Exchange Bankshares go up and down completely randomly.
Pair Corralation between National Capital and Exchange Bankshares
Given the investment horizon of 90 days National Capital Bank is expected to generate 44.19 times more return on investment than Exchange Bankshares. However, National Capital is 44.19 times more volatile than Exchange Bankshares. It trades about 0.31 of its potential returns per unit of risk. Exchange Bankshares is currently generating about 0.34 per unit of risk. If you would invest 4,923 in National Capital Bank on September 1, 2024 and sell it today you would earn a total of 3,577 from holding National Capital Bank or generate 72.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
National Capital Bank vs. Exchange Bankshares
Performance |
| Timeline |
| National Capital Bank |
| Exchange Bankshares |
National Capital and Exchange Bankshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Capital and Exchange Bankshares
The main advantage of trading using opposite National Capital and Exchange Bankshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Capital position performs unexpectedly, Exchange Bankshares 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 Exchange Bankshares will offset losses from the drop in Exchange Bankshares' 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 |
| Exchange Bankshares vs. Piraeus Bank SA | Exchange Bankshares vs. Turkiye Garanti Bankasi | Exchange Bankshares vs. Delhi Bank Corp | Exchange Bankshares vs. Uwharrie Capital Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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