Correlation Between National Bank and Bank Central
Can any of the company-specific risk be diversified away by investing in both National Bank and Bank Central 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 Bank Central into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank of and Bank Central Asia, you can compare the effects of market volatilities on National Bank and Bank Central 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 Bank Central. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Bank Central.
Diversification Opportunities for National Bank and Bank Central
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Bank is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Bank Central Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Central Asia 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 of are associated (or correlated) with Bank Central. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Central Asia has no effect on the direction of National Bank i.e., National Bank and Bank Central go up and down completely randomly.
Pair Corralation between National Bank and Bank Central
Assuming the 90 days horizon National Bank of is expected to under-perform the Bank Central. In addition to that, National Bank is 1.62 times more volatile than Bank Central Asia. It trades about -0.24 of its total potential returns per unit of risk. Bank Central Asia is currently generating about -0.22 per unit of volatility. If you would invest 1,671 in Bank Central Asia on September 1, 2024 and sell it today you would lose (110.00) from holding Bank Central Asia or give up 6.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank of vs. Bank Central Asia
Performance |
| Timeline |
| National Bank |
| Bank Central Asia |
National Bank and Bank Central Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Bank Central
The main advantage of trading using opposite National Bank and Bank Central positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Bank Central 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 Bank Central will offset losses from the drop in Bank Central's long position.| National Bank vs. Piraeus Bank SA | National Bank vs. Turkiye Garanti Bankasi | National Bank vs. Delhi Bank Corp | National Bank vs. Uwharrie Capital Corp |
| Bank Central vs. Piraeus Bank SA | Bank Central vs. Turkiye Garanti Bankasi | Bank Central vs. Delhi Bank Corp | Bank Central vs. Uwharrie Capital Corp |
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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