Correlation Between Alpha Trust and National Bank

Can any of the company-specific risk be diversified away by investing in both Alpha Trust 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 Alpha Trust and National Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alpha Trust Mutual and National Bank of, you can compare the effects of market volatilities on Alpha Trust 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 Alpha Trust with a short position of National Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Trust and National Bank.

Diversification Opportunities for Alpha Trust and National Bank

-0.59

Correlation Coefficient

Alpha Trust  National Bank

Excellent diversification

The 3 months correlation between Alpha and National is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Trust Mutual and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and Alpha Trust 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 Alpha Trust Mutual 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 Alpha Trust i.e., Alpha Trust and National Bank go up and down completely randomly.

Pair Corralation between Alpha Trust and National Bank

Assuming the 90 days trading horizon Alpha Trust Mutual is expected to generate 0.21 times more return on investment than National Bank. However, Alpha Trust Mutual is 4.69 times less risky than National Bank. It trades about 0.02 of its potential returns per unit of risk. National Bank of is currently generating about -0.05 per unit of risk. If you would invest  866.00  in Alpha Trust Mutual on September 5, 2024 and sell it today you would earn a total of  4.00  from holding Alpha Trust Mutual or generate 0.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Alpha Trust Mutual  vs.  National Bank of

Alpha Trust Mutual

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alpha Trust Mutual are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Alpha Trust is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

National Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, National Bank is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Alpha Trust and National Bank

The main advantage of trading using opposite Alpha Trust and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Trust 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.

The idea behind Alpha Trust Mutual and National Bank of pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.