Correlation Between VersaBank and North American
Can any of the company-specific risk be diversified away by investing in both VersaBank and North American 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 VersaBank and North American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and North American Financial, you can compare the effects of market volatilities on VersaBank and North American 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 VersaBank with a short position of North American. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and North American.
Diversification Opportunities for VersaBank and North American
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VersaBank and North is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and North American Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North American Financial and VersaBank 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 VersaBank are associated (or correlated) with North American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North American Financial has no effect on the direction of VersaBank i.e., VersaBank and North American go up and down completely randomly.
Pair Corralation between VersaBank and North American
Assuming the 90 days trading horizon VersaBank is expected to generate 1.33 times more return on investment than North American. However, VersaBank is 1.33 times more volatile than North American Financial. It trades about 0.38 of its potential returns per unit of risk. North American Financial is currently generating about 0.38 per unit of risk. If you would invest 1,811 in VersaBank on September 5, 2024 and sell it today you would earn a total of 685.00 from holding VersaBank or generate 37.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VersaBank vs. North American Financial
Performance |
| Timeline |
| VersaBank |
| North American Financial |
VersaBank and North American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VersaBank and North American
The main advantage of trading using opposite VersaBank and North American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank position performs unexpectedly, North American 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 North American will offset losses from the drop in North American's long position.| VersaBank vs. Canadian Western Bank | VersaBank vs. National Bank of | VersaBank vs. Canadian Imperial Bank | VersaBank vs. Great West Lifeco |
| North American vs. iShares Canadian HYBrid | North American vs. Altagas Cum Red | North American vs. European Residential Real | North American vs. iShares Fundamental Hedged |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |