Correlation Between Western Investment and National Bank
Can any of the company-specific risk be diversified away by investing in both Western 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 Western 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 Western Investment and National Bank of, you can compare the effects of market volatilities on Western 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 Western Investment with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Investment and National Bank.
Diversification Opportunities for Western Investment and National Bank
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and National is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Western Investment and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and Western 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 Western Investment 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 Western Investment i.e., Western Investment and National Bank go up and down completely randomly.
Pair Corralation between Western Investment and National Bank
Given the investment horizon of 90 days Western Investment is expected to generate 9.6 times more return on investment than National Bank. However, Western Investment is 9.6 times more volatile than National Bank of. It trades about 0.14 of its potential returns per unit of risk. National Bank of is currently generating about 0.25 per unit of risk. If you would invest 42.00 in Western Investment on September 1, 2024 and sell it today you would earn a total of 5.00 from holding Western Investment or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Investment vs. National Bank of
Performance |
| Timeline |
| Western Investment |
| National Bank |
Western Investment and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Investment and National Bank
The main advantage of trading using opposite Western Investment and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western 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.| Western Investment vs. National Bank of | Western Investment vs. Renoworks Software | Western Investment vs. US Financial 15 | Western Investment vs. Olympia Financial Group |
| National Bank vs. Gatos Silver | National Bank vs. Andlauer Healthcare Gr | National Bank vs. Bausch Health Companies | National Bank vs. Leveljump Healthcare Corp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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