Correlation Between National Bank and Auburn Bancorp
Can any of the company-specific risk be diversified away by investing in both National Bank and Auburn 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 Auburn Bancorp 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 Auburn Bancorp, you can compare the effects of market volatilities on National Bank and Auburn 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 Auburn Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Auburn Bancorp.
Diversification Opportunities for National Bank and Auburn Bancorp
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between National and Auburn is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and Auburn Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auburn 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 Holdings are associated (or correlated) with Auburn Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auburn Bancorp has no effect on the direction of National Bank i.e., National Bank and Auburn Bancorp go up and down completely randomly.
Pair Corralation between National Bank and Auburn Bancorp
Given the investment horizon of 90 days National Bank Holdings is expected to generate 8.04 times more return on investment than Auburn Bancorp. However, National Bank is 8.04 times more volatile than Auburn Bancorp. It trades about 0.11 of its potential returns per unit of risk. Auburn Bancorp is currently generating about 0.32 per unit of risk. If you would invest 4,469 in National Bank Holdings on September 1, 2024 and sell it today you would earn a total of 305.00 from holding National Bank Holdings or generate 6.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank Holdings vs. Auburn Bancorp
Performance |
| Timeline |
| National Bank Holdings |
| Auburn Bancorp |
National Bank and Auburn Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Auburn Bancorp
The main advantage of trading using opposite National Bank and Auburn Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Auburn 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 Auburn Bancorp will offset losses from the drop in Auburn Bancorp's long position.| National Bank vs. First Community | National Bank vs. Community West Bancshares | National Bank vs. First Financial Northwest | National Bank vs. First Northwest Bancorp |
| Auburn Bancorp vs. Andover Bancorp | Auburn Bancorp vs. Aozora Bank Ltd | Auburn Bancorp vs. Absa Group 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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