Correlation Between VersaBank and Natwest Group
Can any of the company-specific risk be diversified away by investing in both VersaBank and Natwest Group 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 Natwest Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VersaBank and Natwest Group PLC, you can compare the effects of market volatilities on VersaBank and Natwest Group 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 Natwest Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of VersaBank and Natwest Group.
Diversification Opportunities for VersaBank and Natwest Group
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between VersaBank and Natwest is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding VersaBank and Natwest Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natwest Group PLC 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 Natwest Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natwest Group PLC has no effect on the direction of VersaBank i.e., VersaBank and Natwest Group go up and down completely randomly.
Pair Corralation between VersaBank and Natwest Group
Given the investment horizon of 90 days VersaBank is expected to generate 1.25 times more return on investment than Natwest Group. However, VersaBank is 1.25 times more volatile than Natwest Group PLC. It trades about 0.37 of its potential returns per unit of risk. Natwest Group PLC is currently generating about 0.06 per unit of risk. If you would invest 1,475 in VersaBank on August 27, 2024 and sell it today you would earn a total of 237.00 from holding VersaBank or generate 16.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
VersaBank vs. Natwest Group PLC
Performance |
| Timeline |
| VersaBank |
| Natwest Group PLC |
VersaBank and Natwest Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VersaBank and Natwest Group
The main advantage of trading using opposite VersaBank and Natwest Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VersaBank position performs unexpectedly, Natwest Group 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 Natwest Group will offset losses from the drop in Natwest Group's long position.| VersaBank vs. Fifth Third Bancorp | VersaBank vs. Zions Bancorporation | VersaBank vs. Huntington Bancshares Incorporated | VersaBank vs. Comerica |
| Natwest Group vs. ING Group NV | Natwest Group vs. HSBC Holdings PLC | Natwest Group vs. Banco Santander SA | Natwest Group vs. UBS Group AG |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |