Correlation Between National Bank and Associated British
Can any of the company-specific risk be diversified away by investing in both National Bank and Associated British 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 Associated British into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank Holdings and Associated British Foods, you can compare the effects of market volatilities on National Bank and Associated British 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 Associated British. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Associated British.
Diversification Opportunities for National Bank and Associated British
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Associated is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and Associated British Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated British Foods 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 Holdings are associated (or correlated) with Associated British. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated British Foods has no effect on the direction of National Bank i.e., National Bank and Associated British go up and down completely randomly.
Pair Corralation between National Bank and Associated British
Assuming the 90 days horizon National Bank Holdings is expected to under-perform the Associated British. But the stock apears to be less risky and, when comparing its historical volatility, National Bank Holdings is 1.01 times less risky than Associated British. The stock trades about -0.18 of its potential returns per unit of risk. The Associated British Foods is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,717 in Associated British Foods on September 13, 2024 and sell it today you would lose (12.00) from holding Associated British Foods or give up 0.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
National Bank Holdings vs. Associated British Foods
Performance |
| Timeline |
| National Bank Holdings |
| Associated British Foods |
National Bank and Associated British Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Associated British
The main advantage of trading using opposite National Bank and Associated British positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Associated British 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 Associated British will offset losses from the drop in Associated British's long position.| National Bank vs. Fifth Third Bancorp | National Bank vs. Regions Financial | National Bank vs. Superior Plus Corp | National Bank vs. SIVERS SEMICONDUCTORS AB |
| Associated British vs. Hormel Foods | Associated British vs. Superior Plus Corp | Associated British vs. SIVERS SEMICONDUCTORS AB | Associated British vs. NorAm Drilling AS |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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