Correlation Between National Bank and MCB Investment
Can any of the company-specific risk be diversified away by investing in both National Bank and MCB Investment 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 MCB Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank of and MCB Investment Manag, you can compare the effects of market volatilities on National Bank and MCB Investment 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 MCB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and MCB Investment.
Diversification Opportunities for National Bank and MCB Investment
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and MCB is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and MCB Investment Manag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCB Investment Manag 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 of are associated (or correlated) with MCB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCB Investment Manag has no effect on the direction of National Bank i.e., National Bank and MCB Investment go up and down completely randomly.
Pair Corralation between National Bank and MCB Investment
Assuming the 90 days trading horizon National Bank is expected to generate 1.18 times less return on investment than MCB Investment. In addition to that, National Bank is 1.14 times more volatile than MCB Investment Manag. It trades about 0.18 of its total potential returns per unit of risk. MCB Investment Manag is currently generating about 0.24 per unit of volatility. If you would invest 3,035 in MCB Investment Manag on September 3, 2024 and sell it today you would earn a total of 3,552 from holding MCB Investment Manag or generate 117.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.18% |
| Values | Daily Returns |
National Bank of vs. MCB Investment Manag
Performance |
| Timeline |
| National Bank |
| MCB Investment Manag |
National Bank and MCB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and MCB Investment
The main advantage of trading using opposite National Bank and MCB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, MCB Investment 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 MCB Investment will offset losses from the drop in MCB Investment's long position.| National Bank vs. Masood Textile Mills | National Bank vs. Fauji Foods | National Bank vs. KSB Pumps | National Bank vs. Mari Petroleum |
| MCB Investment vs. The Organic Meat | MCB Investment vs. Orient Rental Modaraba | MCB Investment vs. United Insurance | MCB Investment vs. National Foods |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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