Correlation Between National Bank and FVCBankcorp
Can any of the company-specific risk be diversified away by investing in both National Bank and FVCBankcorp 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 FVCBankcorp 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 FVCBankcorp, you can compare the effects of market volatilities on National Bank and FVCBankcorp 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 FVCBankcorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and FVCBankcorp.
Diversification Opportunities for National Bank and FVCBankcorp
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and FVCBankcorp is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and FVCBankcorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FVCBankcorp 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 FVCBankcorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FVCBankcorp has no effect on the direction of National Bank i.e., National Bank and FVCBankcorp go up and down completely randomly.
Pair Corralation between National Bank and FVCBankcorp
Given the investment horizon of 90 days National Bank Holdings is expected to generate 1.38 times more return on investment than FVCBankcorp. However, National Bank is 1.38 times more volatile than FVCBankcorp. It trades about 0.13 of its potential returns per unit of risk. FVCBankcorp is currently generating about 0.09 per unit of risk. If you would invest 4,550 in National Bank Holdings on August 28, 2024 and sell it today you would earn a total of 389.00 from holding National Bank Holdings or generate 8.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank Holdings vs. FVCBankcorp
Performance |
| Timeline |
| National Bank Holdings |
| FVCBankcorp |
National Bank and FVCBankcorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and FVCBankcorp
The main advantage of trading using opposite National Bank and FVCBankcorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, FVCBankcorp 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 FVCBankcorp will offset losses from the drop in FVCBankcorp's long position.| National Bank vs. Fifth Third Bancorp | National Bank vs. Zions Bancorporation | National Bank vs. Huntington Bancshares Incorporated | National Bank vs. Comerica |
| FVCBankcorp vs. Fifth Third Bancorp | FVCBankcorp vs. Zions Bancorporation | FVCBankcorp vs. Huntington Bancshares Incorporated | FVCBankcorp vs. Comerica |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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