Correlation Between National Bank and NISSAN CHEMICAL
Can any of the company-specific risk be diversified away by investing in both National Bank and NISSAN CHEMICAL 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 NISSAN CHEMICAL 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 NISSAN CHEMICAL IND, you can compare the effects of market volatilities on National Bank and NISSAN CHEMICAL 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 NISSAN CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and NISSAN CHEMICAL.
Diversification Opportunities for National Bank and NISSAN CHEMICAL
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and NISSAN is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and NISSAN CHEMICAL IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISSAN CHEMICAL IND 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 NISSAN CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISSAN CHEMICAL IND has no effect on the direction of National Bank i.e., National Bank and NISSAN CHEMICAL go up and down completely randomly.
Pair Corralation between National Bank and NISSAN CHEMICAL
Assuming the 90 days horizon National Bank Holdings is expected to generate 1.51 times more return on investment than NISSAN CHEMICAL. However, National Bank is 1.51 times more volatile than NISSAN CHEMICAL IND. It trades about -0.1 of its potential returns per unit of risk. NISSAN CHEMICAL IND is currently generating about -0.26 per unit of risk. If you would invest 3,991 in National Bank Holdings on December 1, 2024 and sell it today you would lose (119.00) from holding National Bank Holdings or give up 2.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank Holdings vs. NISSAN CHEMICAL IND
Performance |
| Timeline |
| National Bank Holdings |
| NISSAN CHEMICAL IND |
National Bank and NISSAN CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and NISSAN CHEMICAL
The main advantage of trading using opposite National Bank and NISSAN CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, NISSAN CHEMICAL 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 NISSAN CHEMICAL will offset losses from the drop in NISSAN CHEMICAL's long position.| National Bank vs. Japan Asia Investment | National Bank vs. Siamgas And Petrochemicals | National Bank vs. China BlueChemical | National Bank vs. PennyMac Mortgage Investment |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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