Correlation Between National Bank and Woodlands Financial
Can any of the company-specific risk be diversified away by investing in both National Bank and Woodlands Financial 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 Woodlands Financial 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 Woodlands Financial Services, you can compare the effects of market volatilities on National Bank and Woodlands Financial 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 Woodlands Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Woodlands Financial.
Diversification Opportunities for National Bank and Woodlands Financial
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between National and Woodlands is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding National Bank Holdings and Woodlands Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woodlands Financial 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 Woodlands Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woodlands Financial has no effect on the direction of National Bank i.e., National Bank and Woodlands Financial go up and down completely randomly.
Pair Corralation between National Bank and Woodlands Financial
Given the investment horizon of 90 days National Bank Holdings is expected to generate 1.92 times more return on investment than Woodlands Financial. However, National Bank is 1.92 times more volatile than Woodlands Financial Services. It trades about 0.11 of its potential returns per unit of risk. Woodlands Financial Services is currently generating about -0.1 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. Woodlands Financial Services
Performance |
| Timeline |
| National Bank Holdings |
| Woodlands Financial |
National Bank and Woodlands Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Woodlands Financial
The main advantage of trading using opposite National Bank and Woodlands Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Woodlands Financial 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 Woodlands Financial will offset losses from the drop in Woodlands Financial'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 |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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