Correlation Between National Bank and Hilltop Holdings
Can any of the company-specific risk be diversified away by investing in both National Bank and Hilltop Holdings 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 Hilltop Holdings 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 Hilltop Holdings, you can compare the effects of market volatilities on National Bank and Hilltop Holdings 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 Hilltop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Hilltop Holdings.
Diversification Opportunities for National Bank and Hilltop Holdings
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between National and Hilltop is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and Hilltop Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilltop Holdings 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 Hilltop Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilltop Holdings has no effect on the direction of National Bank i.e., National Bank and Hilltop Holdings go up and down completely randomly.
Pair Corralation between National Bank and Hilltop Holdings
Given the investment horizon of 90 days National Bank Holdings is expected to generate 1.2 times more return on investment than Hilltop Holdings. However, National Bank is 1.2 times more volatile than Hilltop Holdings. It trades about 0.11 of its potential returns per unit of risk. Hilltop Holdings is currently generating about 0.08 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 Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank Holdings vs. Hilltop Holdings
Performance |
| Timeline |
| National Bank Holdings |
| Hilltop Holdings |
National Bank and Hilltop Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Hilltop Holdings
The main advantage of trading using opposite National Bank and Hilltop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Hilltop Holdings 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 Hilltop Holdings will offset losses from the drop in Hilltop Holdings' 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 |
| Hilltop Holdings vs. Home Federal Bancorp | Hilltop Holdings vs. First Financial Northwest | Hilltop Holdings vs. First Northwest Bancorp | Hilltop Holdings vs. First Capital |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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