Correlation Between National Bank and UNITED UTILITIES
Can any of the company-specific risk be diversified away by investing in both National Bank and UNITED UTILITIES 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 UNITED UTILITIES 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 UNITED UTILITIES GR, you can compare the effects of market volatilities on National Bank and UNITED UTILITIES 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 UNITED UTILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and UNITED UTILITIES.
Diversification Opportunities for National Bank and UNITED UTILITIES
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and UNITED is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and UNITED UTILITIES GR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED UTILITIES 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 UNITED UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED UTILITIES has no effect on the direction of National Bank i.e., National Bank and UNITED UTILITIES go up and down completely randomly.
Pair Corralation between National Bank and UNITED UTILITIES
Assuming the 90 days horizon National Bank is expected to generate 1.02 times less return on investment than UNITED UTILITIES. In addition to that, National Bank is 2.28 times more volatile than UNITED UTILITIES GR. It trades about 0.16 of its total potential returns per unit of risk. UNITED UTILITIES GR is currently generating about 0.37 per unit of volatility. If you would invest 1,204 in UNITED UTILITIES GR on September 4, 2024 and sell it today you would earn a total of 136.00 from holding UNITED UTILITIES GR or generate 11.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
National Bank Holdings vs. UNITED UTILITIES GR
Performance |
| Timeline |
| National Bank Holdings |
| UNITED UTILITIES |
National Bank and UNITED UTILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and UNITED UTILITIES
The main advantage of trading using opposite National Bank and UNITED UTILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, UNITED UTILITIES 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 UNITED UTILITIES will offset losses from the drop in UNITED UTILITIES's long position.| National Bank vs. US Bancorp | National Bank vs. The PNC Financial | National Bank vs. Fifth Third Bancorp | National Bank vs. Regions Financial |
| UNITED UTILITIES vs. TOTAL GABON | UNITED UTILITIES vs. Walgreens Boots Alliance | UNITED UTILITIES vs. Peak Resources Limited |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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