Correlation Between Security Investment and National Bank
Can any of the company-specific risk be diversified away by investing in both Security Investment 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 Security Investment and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Security Investment Bank and National Bank of, you can compare the effects of market volatilities on Security Investment 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 Security Investment with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Security Investment and National Bank.
Diversification Opportunities for Security Investment and National Bank
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Security and National is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Security Investment Bank and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and Security Investment 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 Security Investment Bank 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 Security Investment i.e., Security Investment and National Bank go up and down completely randomly.
Pair Corralation between Security Investment and National Bank
Assuming the 90 days trading horizon Security Investment Bank is expected to generate 3.6 times more return on investment than National Bank. However, Security Investment is 3.6 times more volatile than National Bank of. It trades about 0.06 of its potential returns per unit of risk. National Bank of is currently generating about 0.11 per unit of risk. If you would invest 384.00 in Security Investment Bank on September 3, 2024 and sell it today you would earn a total of 122.00 from holding Security Investment Bank or generate 31.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 48.38% |
| Values | Daily Returns |
Security Investment Bank vs. National Bank of
Performance |
| Timeline |
| Security Investment Bank |
| National Bank |
Security Investment and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Security Investment and National Bank
The main advantage of trading using opposite Security Investment and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Security Investment 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.| Security Investment vs. Masood Textile Mills | Security Investment vs. Fauji Foods | Security Investment vs. KSB Pumps | Security Investment vs. Mari Petroleum |
| National Bank vs. Masood Textile Mills | National Bank vs. Fauji Foods | National Bank vs. KSB Pumps | National Bank 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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