Correlation Between National Bank and UPDATE SOFTWARE
Can any of the company-specific risk be diversified away by investing in both National Bank and UPDATE SOFTWARE 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 UPDATE SOFTWARE 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 UPDATE SOFTWARE, you can compare the effects of market volatilities on National Bank and UPDATE SOFTWARE 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 UPDATE SOFTWARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and UPDATE SOFTWARE.
Diversification Opportunities for National Bank and UPDATE SOFTWARE
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and UPDATE is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and UPDATE SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPDATE SOFTWARE 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 UPDATE SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPDATE SOFTWARE has no effect on the direction of National Bank i.e., National Bank and UPDATE SOFTWARE go up and down completely randomly.
Pair Corralation between National Bank and UPDATE SOFTWARE
Assuming the 90 days horizon National Bank Holdings is expected to generate 0.45 times more return on investment than UPDATE SOFTWARE. However, National Bank Holdings is 2.23 times less risky than UPDATE SOFTWARE. It trades about -0.31 of its potential returns per unit of risk. UPDATE SOFTWARE is currently generating about -0.18 per unit of risk. If you would invest 4,072 in National Bank Holdings on December 8, 2024 and sell it today you would lose (412.00) from holding National Bank Holdings or give up 10.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank Holdings vs. UPDATE SOFTWARE
Performance |
| Timeline |
| National Bank Holdings |
| UPDATE SOFTWARE |
National Bank and UPDATE SOFTWARE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and UPDATE SOFTWARE
The main advantage of trading using opposite National Bank and UPDATE SOFTWARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, UPDATE SOFTWARE 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 UPDATE SOFTWARE will offset losses from the drop in UPDATE SOFTWARE's long position.| National Bank vs. PSI Software AG | National Bank vs. Carsales | National Bank vs. Check Point Software | National Bank vs. Easy Software AG |
| UPDATE SOFTWARE vs. NH HOTEL GROUP | UPDATE SOFTWARE vs. Linedata Services SA | UPDATE SOFTWARE vs. MIRAMAR HOTEL INV | UPDATE SOFTWARE vs. The Hongkong and |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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