Correlation Between Canso Credit and National Bank
Can any of the company-specific risk be diversified away by investing in both Canso Credit and National Bank 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 Canso Credit and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canso Credit Trust and National Bank of, you can compare the effects of market volatilities on Canso Credit and National Bank 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 Canso Credit with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canso Credit and National Bank.
Diversification Opportunities for Canso Credit and National Bank
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Canso and National is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Canso Credit Trust and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and Canso Credit 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 Canso Credit Trust are associated (or correlated) with National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of Canso Credit i.e., Canso Credit and National Bank go up and down completely randomly.
Pair Corralation between Canso Credit and National Bank
Assuming the 90 days trading horizon Canso Credit is expected to generate 1.93 times less return on investment than National Bank. But when comparing it to its historical volatility, Canso Credit Trust is 1.2 times less risky than National Bank. It trades about 0.07 of its potential returns per unit of risk. National Bank of is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,291 in National Bank of on August 26, 2024 and sell it today you would earn a total of 201.00 from holding National Bank of or generate 8.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canso Credit Trust vs. National Bank of
Performance |
| Timeline |
| Canso Credit Trust |
| National Bank |
Canso Credit and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canso Credit and National Bank
The main advantage of trading using opposite Canso Credit and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canso Credit position performs unexpectedly, National Bank 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 National Bank will offset losses from the drop in National Bank's long position.| Canso Credit vs. MINT Income Fund | Canso Credit vs. Canadian High Income | Canso Credit vs. Blue Ribbon Income | Canso Credit vs. Australian REIT Income |
| National Bank vs. HOME DEPOT CDR | National Bank vs. Canso Credit Trust | National Bank vs. Wilmington Capital Management | National Bank vs. Verizon Communications CDR |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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