Correlation Between Spotify Technology and National Bank
Can any of the company-specific risk be diversified away by investing in both Spotify Technology 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 Spotify Technology and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spotify Technology SA and National Bank of, you can compare the effects of market volatilities on Spotify Technology 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 Spotify Technology with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spotify Technology and National Bank.
Diversification Opportunities for Spotify Technology and National Bank
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Spotify and National is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Spotify Technology SA and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and Spotify Technology 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 Spotify Technology SA 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 Spotify Technology i.e., Spotify Technology and National Bank go up and down completely randomly.
Pair Corralation between Spotify Technology and National Bank
Assuming the 90 days trading horizon Spotify Technology SA is expected to generate 1.76 times more return on investment than National Bank. However, Spotify Technology is 1.76 times more volatile than National Bank of. It trades about 0.16 of its potential returns per unit of risk. National Bank of is currently generating about 0.03 per unit of risk. If you would invest 7,285 in Spotify Technology SA on September 14, 2024 and sell it today you would earn a total of 38,065 from holding Spotify Technology SA or generate 522.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 95.98% |
Values | Daily Returns |
Spotify Technology SA vs. National Bank of
Performance |
Timeline |
Spotify Technology |
National Bank |
Spotify Technology and National Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Spotify Technology and National Bank
The main advantage of trading using opposite Spotify Technology and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spotify Technology 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.Spotify Technology vs. Samsung Electronics Co | Spotify Technology vs. Samsung Electronics Co | Spotify Technology vs. Hyundai Motor | Spotify Technology vs. Reliance Industries Ltd |
National Bank vs. Spotify Technology SA | National Bank vs. Gamma Communications PLC | National Bank vs. Microchip Technology | National Bank vs. Bytes Technology |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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