Correlation Between National Bank and Premier Insurance
Can any of the company-specific risk be diversified away by investing in both National Bank and Premier Insurance 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 Premier Insurance 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 Premier Insurance, you can compare the effects of market volatilities on National Bank and Premier Insurance 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 Premier Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Premier Insurance.
Diversification Opportunities for National Bank and Premier Insurance
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Premier is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Premier Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Insurance 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 Premier Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Insurance has no effect on the direction of National Bank i.e., National Bank and Premier Insurance go up and down completely randomly.
Pair Corralation between National Bank and Premier Insurance
Assuming the 90 days trading horizon National Bank of is expected to generate 0.77 times more return on investment than Premier Insurance. However, National Bank of is 1.29 times less risky than Premier Insurance. It trades about 0.07 of its potential returns per unit of risk. Premier Insurance is currently generating about -0.08 per unit of risk. If you would invest 6,932 in National Bank of on August 30, 2024 and sell it today you would earn a total of 300.00 from holding National Bank of or generate 4.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 78.26% |
| Values | Daily Returns |
National Bank of vs. Premier Insurance
Performance |
| Timeline |
| National Bank |
| Premier Insurance |
National Bank and Premier Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Premier Insurance
The main advantage of trading using opposite National Bank and Premier Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Premier Insurance 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 Premier Insurance will offset losses from the drop in Premier Insurance's long position.| National Bank vs. Pakistan Synthetics | National Bank vs. Silkbank | National Bank vs. Big Bird Foods | National Bank vs. Ghani Chemical Industries |
| Premier Insurance vs. Masood Textile Mills | Premier Insurance vs. Fauji Foods | Premier Insurance vs. KSB Pumps | Premier Insurance vs. Mari Petroleum |
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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