Correlation Between National Bankshares and Bank of the
Can any of the company-specific risk be diversified away by investing in both National Bankshares and Bank of the 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 Bankshares and Bank of the into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bankshares and Bank of the, you can compare the effects of market volatilities on National Bankshares and Bank of the 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 Bankshares with a short position of Bank of the. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bankshares and Bank of the.
Diversification Opportunities for National Bankshares and Bank of the
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between National and Bank is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding National Bankshares and Bank of the in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of the and National Bankshares 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 Bankshares are associated (or correlated) with Bank of the. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of the has no effect on the direction of National Bankshares i.e., National Bankshares and Bank of the go up and down completely randomly.
Pair Corralation between National Bankshares and Bank of the
Given the investment horizon of 90 days National Bankshares is expected to generate 2.18 times less return on investment than Bank of the. In addition to that, National Bankshares is 1.04 times more volatile than Bank of the. It trades about 0.02 of its total potential returns per unit of risk. Bank of the is currently generating about 0.04 per unit of volatility. If you would invest 1,155 in Bank of the on November 5, 2024 and sell it today you would earn a total of 235.00 from holding Bank of the or generate 20.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bankshares vs. Bank of the
Performance |
| Timeline |
| National Bankshares |
| Bank of the |
National Bankshares and Bank of the Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bankshares and Bank of the
The main advantage of trading using opposite National Bankshares and Bank of the positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bankshares position performs unexpectedly, Bank of the 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 Bank of the will offset losses from the drop in Bank of the's long position.| National Bankshares vs. Finward Bancorp | National Bankshares vs. Community West Bancshares | National Bankshares vs. First Financial Northwest | National Bankshares vs. Oak Valley Bancorp |
| Bank of the vs. National Bankshares | Bank of the vs. Home Federal Bancorp | Bank of the vs. Old Point Financial | Bank of the vs. Southern Missouri Bancorp |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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