Correlation Between UNITED UTILITIES and National Bank
Can any of the company-specific risk be diversified away by investing in both UNITED UTILITIES 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 UNITED UTILITIES and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED UTILITIES GR and National Bank Holdings, you can compare the effects of market volatilities on UNITED UTILITIES 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 UNITED UTILITIES with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED UTILITIES and National Bank.
Diversification Opportunities for UNITED UTILITIES and National Bank
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UNITED and National is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings and UNITED UTILITIES 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 UNITED UTILITIES GR 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 Holdings has no effect on the direction of UNITED UTILITIES i.e., UNITED UTILITIES and National Bank go up and down completely randomly.
Pair Corralation between UNITED UTILITIES and National Bank
Assuming the 90 days trading horizon UNITED UTILITIES is expected to generate 1.15 times less return on investment than National Bank. But when comparing it to its historical volatility, UNITED UTILITIES GR is 2.32 times less risky than National Bank. It trades about 0.37 of its potential returns per unit of risk. National Bank Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,994 in National Bank Holdings on September 3, 2024 and sell it today you would earn a total of 486.00 from holding National Bank Holdings or generate 12.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED UTILITIES GR vs. National Bank Holdings
Performance |
| Timeline |
| UNITED UTILITIES |
| National Bank Holdings |
UNITED UTILITIES and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED UTILITIES and National Bank
The main advantage of trading using opposite UNITED UTILITIES and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED UTILITIES 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.| UNITED UTILITIES vs. ANTA SPORTS PRODUCT | UNITED UTILITIES vs. Transport International Holdings | UNITED UTILITIES vs. Sqs Software Quality | UNITED UTILITIES vs. PSI Software AG |
| National Bank vs. NXP Semiconductors NV | National Bank vs. ON SEMICONDUCTOR | National Bank vs. Tower One Wireless | National Bank vs. SK TELECOM TDADR |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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