Correlation Between NRB Industrial and City Union
Can any of the company-specific risk be diversified away by investing in both NRB Industrial and City Union 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 NRB Industrial and City Union into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NRB Industrial Bearings and City Union Bank, you can compare the effects of market volatilities on NRB Industrial and City Union 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 NRB Industrial with a short position of City Union. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRB Industrial and City Union.
Diversification Opportunities for NRB Industrial and City Union
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NRB and City is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding NRB Industrial Bearings and City Union Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Union Bank and NRB Industrial 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 NRB Industrial Bearings are associated (or correlated) with City Union. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Union Bank has no effect on the direction of NRB Industrial i.e., NRB Industrial and City Union go up and down completely randomly.
Pair Corralation between NRB Industrial and City Union
Assuming the 90 days trading horizon NRB Industrial Bearings is expected to under-perform the City Union. In addition to that, NRB Industrial is 1.61 times more volatile than City Union Bank. It trades about -0.09 of its total potential returns per unit of risk. City Union Bank is currently generating about 0.03 per unit of volatility. If you would invest 17,845 in City Union Bank on September 3, 2024 and sell it today you would earn a total of 108.00 from holding City Union Bank or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
NRB Industrial Bearings vs. City Union Bank
Performance |
| Timeline |
| NRB Industrial Bearings |
| City Union Bank |
NRB Industrial and City Union Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NRB Industrial and City Union
The main advantage of trading using opposite NRB Industrial and City Union positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRB Industrial position performs unexpectedly, City Union 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 City Union will offset losses from the drop in City Union's long position.| NRB Industrial vs. Tata Consultancy Services | NRB Industrial vs. Reliance Industries Limited | NRB Industrial vs. Wipro Limited | NRB Industrial vs. Shipping |
| City Union vs. Reliance Industries Limited | City Union vs. Shipping | City Union vs. Indo Borax Chemicals | City Union vs. Kingfa Science Technology |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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