Correlation Between National Bank and REGAL HOTEL
Can any of the company-specific risk be diversified away by investing in both National Bank and REGAL HOTEL 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 REGAL HOTEL 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 REGAL HOTEL INTL, you can compare the effects of market volatilities on National Bank and REGAL HOTEL 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 REGAL HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and REGAL HOTEL.
Diversification Opportunities for National Bank and REGAL HOTEL
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and REGAL is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and REGAL HOTEL INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REGAL HOTEL INTL 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 REGAL HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REGAL HOTEL INTL has no effect on the direction of National Bank i.e., National Bank and REGAL HOTEL go up and down completely randomly.
Pair Corralation between National Bank and REGAL HOTEL
Assuming the 90 days horizon National Bank Holdings is expected to generate 2.13 times more return on investment than REGAL HOTEL. However, National Bank is 2.13 times more volatile than REGAL HOTEL INTL. It trades about 0.14 of its potential returns per unit of risk. REGAL HOTEL INTL is currently generating about 0.01 per unit of risk. If you would invest 4,120 in National Bank Holdings on August 31, 2024 and sell it today you would earn a total of 380.00 from holding National Bank Holdings or generate 9.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank Holdings vs. REGAL HOTEL INTL
Performance |
| Timeline |
| National Bank Holdings |
| REGAL HOTEL INTL |
National Bank and REGAL HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and REGAL HOTEL
The main advantage of trading using opposite National Bank and REGAL HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, REGAL HOTEL 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 REGAL HOTEL will offset losses from the drop in REGAL HOTEL's long position.| National Bank vs. Fifth Third Bancorp | National Bank vs. Regions Financial | National Bank vs. Superior Plus Corp | National Bank vs. Origin Agritech |
| REGAL HOTEL vs. Webster Financial | REGAL HOTEL vs. OFFICE DEPOT | REGAL HOTEL vs. Haier Smart Home | REGAL HOTEL vs. National Bank Holdings |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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