Correlation Between National Bank and Stryker
Can any of the company-specific risk be diversified away by investing in both National Bank and Stryker 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 Stryker 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 Stryker, you can compare the effects of market volatilities on National Bank and Stryker 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 Stryker. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Stryker.
Diversification Opportunities for National Bank and Stryker
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and Stryker is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and Stryker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stryker 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 Stryker. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stryker has no effect on the direction of National Bank i.e., National Bank and Stryker go up and down completely randomly.
Pair Corralation between National Bank and Stryker
Assuming the 90 days horizon National Bank is expected to generate 1.03 times less return on investment than Stryker. In addition to that, National Bank is 1.7 times more volatile than Stryker. It trades about 0.14 of its total potential returns per unit of risk. Stryker is currently generating about 0.24 per unit of volatility. If you would invest 33,480 in Stryker on August 31, 2024 and sell it today you would earn a total of 3,450 from holding Stryker or generate 10.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank Holdings vs. Stryker
Performance |
| Timeline |
| National Bank Holdings |
| Stryker |
National Bank and Stryker Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Stryker
The main advantage of trading using opposite National Bank and Stryker positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Stryker 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 Stryker will offset losses from the drop in Stryker'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 |
| Stryker vs. Digilife Technologies Limited | Stryker vs. Heartland Financial USA | Stryker vs. National Bank Holdings | Stryker vs. Webster 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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