Correlation Between National Bank and LINKBANCORP
Can any of the company-specific risk be diversified away by investing in both National Bank and LINKBANCORP 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 LINKBANCORP 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 LINKBANCORP, you can compare the effects of market volatilities on National Bank and LINKBANCORP 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 LINKBANCORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and LINKBANCORP.
Diversification Opportunities for National Bank and LINKBANCORP
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between National and LINKBANCORP is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and LINKBANCORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINKBANCORP 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 LINKBANCORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINKBANCORP has no effect on the direction of National Bank i.e., National Bank and LINKBANCORP go up and down completely randomly.
Pair Corralation between National Bank and LINKBANCORP
Given the investment horizon of 90 days National Bank Holdings is expected to generate 0.99 times more return on investment than LINKBANCORP. However, National Bank Holdings is 1.01 times less risky than LINKBANCORP. It trades about 0.12 of its potential returns per unit of risk. LINKBANCORP is currently generating about 0.07 per unit of risk. If you would invest 3,582 in National Bank Holdings on August 28, 2024 and sell it today you would earn a total of 1,291 from holding National Bank Holdings or generate 36.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank Holdings vs. LINKBANCORP
Performance |
| Timeline |
| National Bank Holdings |
| LINKBANCORP |
National Bank and LINKBANCORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and LINKBANCORP
The main advantage of trading using opposite National Bank and LINKBANCORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, LINKBANCORP 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 LINKBANCORP will offset losses from the drop in LINKBANCORP'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 |
| LINKBANCORP vs. Fifth Third Bancorp | LINKBANCORP vs. Huntington Bancshares Incorporated | LINKBANCORP vs. MT Bank |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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