Correlation Between National Bank and United Bancorp
Can any of the company-specific risk be diversified away by investing in both National Bank and United Bancorp 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 Bancorp 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 United Bancorp, you can compare the effects of market volatilities on National Bank and United Bancorp 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 Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and United Bancorp.
Diversification Opportunities for National Bank and United Bancorp
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and United is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and United Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Bancorp 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 United Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Bancorp has no effect on the direction of National Bank i.e., National Bank and United Bancorp go up and down completely randomly.
Pair Corralation between National Bank and United Bancorp
Assuming the 90 days horizon National Bank of is expected to generate 1.26 times more return on investment than United Bancorp. However, National Bank is 1.26 times more volatile than United Bancorp. It trades about 0.06 of its potential returns per unit of risk. United Bancorp is currently generating about 0.02 per unit of risk. If you would invest 441.00 in National Bank of on October 14, 2024 and sell it today you would earn a total of 378.00 from holding National Bank of or generate 85.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank of vs. United Bancorp
Performance |
| Timeline |
| National Bank |
| United Bancorp |
National Bank and United Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and United Bancorp
The main advantage of trading using opposite National Bank and United Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, United Bancorp 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 Bancorp will offset losses from the drop in United Bancorp's long position.| National Bank vs. Alpha Bank SA | National Bank vs. Eurobank Ergasias SA | National Bank vs. Piraeus Bank SA | National Bank vs. PT Bank Central |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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