Correlation Between National Bank and German American
Can any of the company-specific risk be diversified away by investing in both National Bank and German American 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 German American 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 German American Bancorp, you can compare the effects of market volatilities on National Bank and German American 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 German American. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and German American.
Diversification Opportunities for National Bank and German American
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between National and German is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and German American Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on German American 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 German American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of German American Bancorp has no effect on the direction of National Bank i.e., National Bank and German American go up and down completely randomly.
Pair Corralation between National Bank and German American
Given the investment horizon of 90 days National Bank is expected to generate 1.48 times less return on investment than German American. In addition to that, National Bank is 1.04 times more volatile than German American Bancorp. It trades about 0.13 of its total potential returns per unit of risk. German American Bancorp is currently generating about 0.2 per unit of volatility. If you would invest 4,044 in German American Bancorp on August 28, 2024 and sell it today you would earn a total of 522.00 from holding German American Bancorp or generate 12.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
National Bank Holdings vs. German American Bancorp
Performance |
| Timeline |
| National Bank Holdings |
| German American Bancorp |
National Bank and German American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and German American
The main advantage of trading using opposite National Bank and German American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, German American 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 German American will offset losses from the drop in German American'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 |
| German American vs. Lakeland Financial | German American vs. Great Southern Bancorp | German American vs. First Merchants | German American vs. First Financial |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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