Correlation Between National Bank and Rollins
Can any of the company-specific risk be diversified away by investing in both National Bank and Rollins 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 Rollins 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 Rollins, you can compare the effects of market volatilities on National Bank and Rollins 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 Rollins. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Rollins.
Diversification Opportunities for National Bank and Rollins
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Rollins is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and Rollins in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rollins 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 Rollins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rollins has no effect on the direction of National Bank i.e., National Bank and Rollins go up and down completely randomly.
Pair Corralation between National Bank and Rollins
Assuming the 90 days horizon National Bank is expected to generate 1.14 times less return on investment than Rollins. In addition to that, National Bank is 1.45 times more volatile than Rollins. It trades about 0.03 of its total potential returns per unit of risk. Rollins is currently generating about 0.05 per unit of volatility. If you would invest 3,437 in Rollins on September 12, 2024 and sell it today you would earn a total of 1,179 from holding Rollins or generate 34.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank Holdings vs. Rollins
Performance |
| Timeline |
| National Bank Holdings |
| Rollins |
National Bank and Rollins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Rollins
The main advantage of trading using opposite National Bank and Rollins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Rollins 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 Rollins will offset losses from the drop in Rollins' 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 |
| Rollins vs. National Bank Holdings | Rollins vs. ADRIATIC METALS LS 013355 | Rollins vs. Regions Financial | Rollins vs. TFS FINANCIAL |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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