Correlation Between Velocity Financial and National Bank
Can any of the company-specific risk be diversified away by investing in both Velocity Financial 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 Velocity Financial and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Velocity Financial Llc and National Bank Holdings, you can compare the effects of market volatilities on Velocity Financial 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 Velocity Financial with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Velocity Financial and National Bank.
Diversification Opportunities for Velocity Financial and National Bank
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Velocity and National is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Velocity Financial Llc 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 Velocity Financial 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 Velocity Financial Llc 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 Velocity Financial i.e., Velocity Financial and National Bank go up and down completely randomly.
Pair Corralation between Velocity Financial and National Bank
Considering the 90-day investment horizon Velocity Financial is expected to generate 1.5 times less return on investment than National Bank. But when comparing it to its historical volatility, Velocity Financial Llc is 3.82 times less risky than National Bank. It trades about 0.33 of its potential returns per unit of risk. National Bank Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,550 in National Bank Holdings on August 28, 2024 and sell it today you would earn a total of 389.00 from holding National Bank Holdings or generate 8.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Velocity Financial Llc vs. National Bank Holdings
Performance |
| Timeline |
| Velocity Financial Llc |
| National Bank Holdings |
Velocity Financial and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Velocity Financial and National Bank
The main advantage of trading using opposite Velocity Financial and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Velocity Financial 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.| Velocity Financial vs. National Bank Holdings | Velocity Financial vs. Community West Bancshares | Velocity Financial vs. Financial Institutions | Velocity Financial vs. Kearny Financial Corp |
| National Bank vs. Fifth Third Bancorp | National Bank vs. Zions Bancorporation | National Bank vs. Huntington Bancshares Incorporated | National Bank vs. Comerica |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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