Correlation Between M Split and National Bank
Can any of the company-specific risk be diversified away by investing in both M Split 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 M Split and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between M Split Corp and National Bank of, you can compare the effects of market volatilities on M Split 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 M Split with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of M Split and National Bank.
Diversification Opportunities for M Split and National Bank
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between XMF-PB and National is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding M Split Corp and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and M Split 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 M Split Corp 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 M Split i.e., M Split and National Bank go up and down completely randomly.
Pair Corralation between M Split and National Bank
Assuming the 90 days trading horizon M Split is expected to generate 2.34 times less return on investment than National Bank. But when comparing it to its historical volatility, M Split Corp is 1.46 times less risky than National Bank. It trades about 0.06 of its potential returns per unit of risk. National Bank of is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,493 in National Bank of on September 13, 2024 and sell it today you would earn a total of 918.00 from holding National Bank of or generate 61.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
M Split Corp vs. National Bank of
Performance |
| Timeline |
| M Split Corp |
| National Bank |
M Split and National Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with M Split and National Bank
The main advantage of trading using opposite M Split and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if M Split 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.| M Split vs. National Bank of | M Split vs. Bank of Nova | M Split vs. iA Financial | M Split vs. Calian Technologies |
| National Bank vs. Brookfield Infrastructure Partners | National Bank vs. Brookfield Infrastructure Partners | National Bank vs. iShares Canadian HYBrid | National Bank vs. Solar Alliance Energy |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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