Correlation Between National Bank and United Overseas
Can any of the company-specific risk be diversified away by investing in both National Bank and United Overseas 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 Overseas 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 Overseas Bank, you can compare the effects of market volatilities on National Bank and United Overseas 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 Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and United Overseas.
Diversification Opportunities for National Bank and United Overseas
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between National and United is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and United Overseas Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Overseas Bank 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 Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Overseas Bank has no effect on the direction of National Bank i.e., National Bank and United Overseas go up and down completely randomly.
Pair Corralation between National Bank and United Overseas
Assuming the 90 days horizon National Bank of is expected to generate 3.02 times more return on investment than United Overseas. However, National Bank is 3.02 times more volatile than United Overseas Bank. It trades about 0.05 of its potential returns per unit of risk. United Overseas Bank is currently generating about 0.06 per unit of risk. If you would invest 405.00 in National Bank of on September 3, 2024 and sell it today you would earn a total of 300.00 from holding National Bank of or generate 74.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank of vs. United Overseas Bank
Performance |
| Timeline |
| National Bank |
| United Overseas Bank |
National Bank and United Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and United Overseas
The main advantage of trading using opposite National Bank and United Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, United Overseas 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 Overseas will offset losses from the drop in United Overseas' long position.| National Bank vs. First Hawaiian | National Bank vs. Central Pacific Financial | National Bank vs. Territorial Bancorp | National Bank vs. Comerica |
| United Overseas vs. Western Asset Global | United Overseas vs. Invesco Trust For | United Overseas vs. Logan Ridge Finance | United Overseas vs. Invesco Advantage MIT |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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